Evaluation of the Effectiveness of the Board of Directors

The Company conducts the evaluation of the effectiveness of the Board of Directors annually to improve the effectiveness of the Board of Directors and enhance its corporate value. In addition to revising the evaluation items and questionnaire content, based on the suggestions of an external evaluation agency, we had the external evaluation agency be in charge of the administration from the distribution of the questionnaire and the aggregation of answers to the analysis of results in order to increase the objectivity and transparency of the evaluation process. The evaluation process and results for the current fiscal year are as follows.

Evaluation process

1.

Consider the evaluation methods and questionnaire content for the current fiscal year, based on the suggestions and advice of the external evaluation agency, and report to the Board of Directors.
2.

The external evaluation agency conducts a (anonymous) questionnaire to evaluate the effectiveness of all Directors.
3.

The external evaluation agency compiles and analyzes the results of the questionnaire described in ii) above, extracts issues and opinions that may require discussion, and reports them.
4.

Evaluation meetings were conducted by all Directors based on the results of the questionnaire in iii) above.
5.

Discussed opinions and issues that come up in the evaluation meetings by the Board of Directors, and determined any issues to be addressed.

Evaluation (Questionnaire) items

1.

Composition and operation of the Board of Directors
2.

Management strategy and management plan
3.

Corporate ethics and risk management
4.

Supervision of nomination and remuneration
5.

Dialogue with shareholders, etc.

Evaluation by external organization

Based on their evaluation, the external evaluation agency found that the Company is working seriously on the evaluation of the effectiveness of the Board of Directors and is striving to improve its corporate value further. In particular, based on the results of the effectiveness evaluation questionnaire, all Directors held discussions to review the necessity of separating supervision and execution, as well as the composition of the Board of Directors as a supervisory body; this initiative was highly praised for fostering a shared understanding among all Directors on the significance of enhancing effectiveness, while engaging in the "Evaluation of the Effectiveness of the Board of Directors" with a consciousness of the PDCA cycle.

Status of initiatives for issues in the previous fiscal year

Issue1): "Discussion on investments in human capital that are linked to the management strategy"
The Board of Directors receives regular reports on activities and investments related to human capital, and oversees the progress of these efforts; however, since improvements in evaluation take time, we recognize this as being an ongoing issue and will continue to address it.
Issue2): "Review of matters to be deliberated and how deliberations should be conducted at the Board of Directors meetings"
In conjunction with the transition to a company with Audit and Supervisory Committee, the delegation of authority to Executive Directors has been promoted, and a review of matters to be submitted to the Board of Directors and related regulations was conducted in order to allow the Board to spend more time deliberating on medium- to long-term management issues.

Issues for the current fiscal year

With the transition to a company with Audit and Supervisory Committee and an increased ratio of outside directors on the Board of Directors, we recognize the need to deepen discussions on "the composition of the Board of Directors as a monitoring body and the roles of individual directors," and have identified this as being a new issue to address. The Company will endeavor to maintain and enhance the effectiveness of the Board of Directors by continuously working on the issue1) "Discussion on investments in human capital that are linked to the management strategy" in above, in addition to newly recognized issues.

Major issues and countermeasures in the effectiveness evaluation of the Board of Directors

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It contains measures to address issues for FY 2015-2020, FY 2021, FY 2022, and FY 2023. In terms of the Basic Corporate Governance Policy, it was established in FY 2015, revised for the first time in FY 2018, for the second time in FY 2021, and for the third time in FY 2024. From the perspective of management policy and strategy, the Nominating and Strategy Committee developed related rules and regulations from FY2015 to FY2020 to improve the effectiveness of the Nominating and Strategy Committee. In FY2021, we regularly reported to the Board of Directors on the activities and investments of the Human Capital Dynamics Committee as part of discussions on investments in human capital linked to the "Continuous" management strategy. In addition, we will continue to make efforts to improve the supervisory function around FY2020. In addition, around FY2020, we also established an activity reporting opportunity and Sustainability Committee as part of our efforts in digital technology utilization and sustainability, straddling the enhancement of supervisory functions, and in FY2023, we reviewed the items to be discussed and the nature of discussions at the Board of Directors meetings. From the perspective of strengthening the supervisory function, the scope of delegation to the Executive Committee and reporting items were reviewed in FY2015 in order to delegate authority and review agenda items. In parallel, we introduced the preparation guidelines and executive summary as standards for the preparation of board meeting materials, and around FY2019, we implemented regular reporting by all divisions to improve reporting on priority measures. In FY2024, we held discussions on the role of the Board of Directors as a monitoring board and the role of each director. In terms of board composition training, from FY2015 to FY2017, we reviewed training themes as an opportunity to promote the development of candidates and to acquire knowledge and skills as a diversity of the board. In conjunction with this, we conducted human resource development and human resource strategy in FY 2019 and enhanced knowledge and skills acquisition opportunities in FY 2020. Around FY2021, the Nominating Committee held a discussion on the composition of the Board of Directors from a medium-term perspective by discussing the succession of directors. Around the same time, we conducted group training & selective training. From a risk management perspective, around FY2015, we started quarterly reporting of each business and expanded information provision to outside directors in order to strengthen supervision of important issues. The strengthening of supervision over important issues is linked to the improvement of reporting on priority measures from the perspective of strengthening the supervisory function. To strengthen the Internal Control Committee structure, we reviewed the structure of the Internal Control Committee. In addition, as a way to understand business risks, we explained risk avoidance measures for deliberation by the Management Committee. In conjunction with the strengthening of the Internal Control Committee's structure and the identification of business risks, a Risk Management Subcommittee was established under the Internal Control Committee around FY2021 to review the risk map and strengthen the management system.