Evaluation of the Effectiveness of the Board of Directors
The Company has evaluated the effectiveness of the Board of Directors annually since fiscal 2015.
In fiscal 2021, the Company utilized external evaluation for the second time since fiscal 2018.
Purpose, Method and Process of Evaluation of Effectiveness
The Company has evaluated the effectiveness of the Board of Directors with the aim of improving the effectiveness of the Board of Directors for enhancing corporate governance of the Company: specifically, recognizing any differences between the ideal status of the roles and duties, etc. of the Board of Directors of the Company that are set forth in the Basic Policy on Corporate Governance and the actual circumstances; regularly and repeatedly engaging in agenda-finding and improvement activities; and thereby continuously improving the functions of the Board of Directors. In fiscal 2021, the Company conducted a questionnaire for all the Directors and Audit & Supervisory Board Members from January to February 2022, and then interviews with Outside Directors, Outside Audit & Supervisory Board Members and Representative Directors (10 persons in total) by an external evaluator (outside legal counsel) in March 2022. Opinions were exchanged at the meeting of the Board of Directors held in April 2022 regarding the results of the questionnaire and the report of summary of interviews conducted by the external evaluator. Later, the external evaluator reported an evaluation result at the meeting of the Board of Directors held in May 2022.
Topics to Be Evaluated
The questionnaire (anonymous) is conducted to seek answers of quantitative evaluation on four scales for each topic and also opinions freely entered in comment boxes. In fiscal 2021, some of the topics to be evaluated in the questionnaire were revised based on the revision of the Corporate Governance Code in June 2021. The major topics of the questionnaire were as follows:
1) Composition of the Board of Directors
2) Roles and duties of the Board of Directors
3) Status of the operations of the Board of Directors
4) Functions of the Nomination and Compensation Committee
5) Support system for Outside Directors and Outside Audit & Supervisory Board Members
6) Roles and responsibilities of Independent Outside Directors
7) Roles and responsibilities of Audit & Supervisory Board Members/Response to what is pointed out by Audit & Supervisory Board Members at the meeting of the Board of Directors
8) Relationship with stakeholders/examination of issues of sustainability
9) Related party transactions
10) Review on strategic shareholdings
11) Provision of training
12) Efforts made for the agendas identified in the previous fiscal year
Results of Self-Evaluation
Based on the report of the quantitative analysis of answers to the questionnaire (including the comparative analysis with the numerical values of the evaluation results in the past) and all the opinions entered in the comment boxes, opinions were exchanged at the meeting of the Board of Directors in April of 2022. As a result, it was confirmed that there is no major problem to be pointed out with respect to the operation of the Board of Directors in fiscal 2021 and the effectiveness of the Board of Directors of the Company has been ensured in general. In addition, it was agreed that appropriate progress was seen as to the efforts for the major agendas of fiscal 2021 ((i) Further enhancement of discussions for risk management, (ii) Provision of the appropriate number of agenda items and appropriate time for deliberation, and (iii) Enhancement of training).
Results of External Evaluation
At the meeting of the Board of Directors held in May of 2022, the external evaluator reported an evaluation result stating that it is considered that the effectiveness of the Board of Directors of the Company has been ensured as a whole with respect to its effectiveness in fiscal 2021 (including efforts made for the major agendas), as a result of the review of the materials related to the Board of Directors and other documents, analysis of questionnaires, interviews conducted, as well as the observation of discussions at the meeting of the Board of Directors held in April 2022. In addition, the external evaluator provided suggestions and opinions regarding matters for which discussions would be preferable for further improvement of the effectiveness.
Major Agendas to Be Addressed in fiscal 2022
The following agendas have been identified as major agendas to be addressed in fiscal 2022 as a result of the evaluation of the effectiveness of the Board of Directors for fiscal 2021.
• Effective supervision of the management through more efficient and effective monitoring of material items
• Constructive discussions regarding agendas to be addressed in the medium- to long-term
• Deepening of discussion regarding issues related to sustainability
The Board of Directors of the Company is determined to further enhance its functions, while addressing these agendas.