Policies and Procedures for Appointment/Dismissal and Nomination of Directors and Audit & Supervisory Board Members, and Training

Last update: June 2, 2021

1Board policies and procedures in the appointment/dismissal of senior management and the nomination of Director and Audit & Supervisory Board Member candidates
[CGC Principle 3.1 (iv)]
[CGC Supplementary Principle 4.11.1]

(1) Basic policy

The Company established the “Nomination Committee” with an Independent Outside Director as the Chair to be an advisory committee to the Board of Directors, and by the committee’s deliberations on the nomination of Representative Directors, Directors, Audit & Supervisory Board Members, and executive officers (in this paragraph, “Officers, etc.”) utilizes the knowledge and advice of Outside Directors and Outside Audit & Supervisory Board Members and ensures objectivity and transparency in the procedures for deciding the nomination of Officers, etc., thereby enhancing the supervisory functions of the Board of Directors and further substantiating corporate governance functions. Please refer to the “Nomination Committee and Compensation Committee system” regarding the Nomination Committee system, etc.

(2) Reporting process (an example of the nomination process)

Status of the Nomination and Compensation Committee in FY2020

2Requirements and qualities of Directors and Audit & Supervisory Board Members

The Company has stipulated the requirements and qualities of the Directors and Audit & Supervisory Board Members in the “Guidelines for Directors and Audit & Supervisory Board Members.”

(1) Formulation of the Guidelines for Directors and Audit & Supervisory Board Members

To improve the Company’s corporate governance, the “Governance Roundtable Talks” have been held several times since January 2016 comprising all of the Outside Directors and Outside Audit & Supervisory Board Members and the management team to discuss corporate governance based on the main themes of Japan’s Corporate Governance Code. This is a discretionary initiative to enable intensive discussion and receive free and open advice from the Outside Directors and Outside Audit & Supervisory Board Members.
 In the above process, the members discussed the standards for nomination of Directors and Audit & Supervisory Board Members to determine what kind of personnel are “needed” and “desirable” for the Group’s Directors and Audit & Supervisory Board Members. The results of the discussion regarding the requirements and qualities for these personnel have been formulated as the “Guidelines for Directors and Audit & Supervisory Board Members.”
 The “Guidelines for Directors and Audit & Supervisory Board Members” were formulated with the approval of the Nomination and Compensation Committee meeting held in April 2016 and of the Board of Directors meeting held on April 7, 2016. (Some of the wording was revised at the Board of Directors meetings held on May 26, 2016 and November 1, 2018).

(2) Basic perspective on the requirements and qualities of Directors and Audit & Supervisory Board Members

The Company believes that discussion of corporate governance concerning Officers, etc. should begin with the assumption that “nobody is perfect.”
 Thus, the Company has clarified “conditions that must be satisfied by Directors and Audit & Supervisory Board Members” as universal “requirements.” Meanwhile, the “strengths” of each individual can vary; thus, the Company has treated these “personnel selection analysis and perspective that allows for individual strengths and weaknesses” as “qualities” separately from the requirements.
 The desirable “qualities” differ depending on the duties assigned to each Director and Audit & Supervisory Board Member, and have been set separately depending on the positions as set forth below:
1. Directors responsible for business execution
2. Directors and Audit & Supervisory Board Members responsible for supervision and audits
3. Group representative (Company President)
 On the assumption that each individual Director and Audit & Supervisory Board Member has different strengths and weaknesses with regard to his/her “qualities,” the Company considers it important to select Board members by utilizing and combining individual “strengths” while emphasizing the diversity of the Directors and Audit & Supervisory Board Members.
 If any Director or Audit & Supervisory Board Member has come to lack these “requirements” or “qualities,” the Company shall consider dismissing such Director or Audit &Supervisory Board Member.

Conceptual drawing of “requirements” and “qualities”

(Reference) Directors and Audit & Supervisory Board Member “Requirements”: Conditions that must be satisfied
Candidate
director A
Candidate
director B
Candidate
director C
Requirement 1
Requirement 2 ×
Requirement 3 ×
Result × ×
(Reference) Director and Audit & Supervisory Board Member “Qualities”: Personnel selection analysis and perspective allowing for individual strengths and weaknessConceptual drawing of “requirements” and “qualities”

3Basic policy regarding qualities and appointment/dismissal of Group representative (Company President) (Group representative succession plan)

The Company has stipulated the following qualities desired for Group representative (Company President) in the Guidelines for Directors and Audit & Supervisory Board Members.

Appropriate qualities and viewpoints for Group representative
Qualities Viewpoints
Business management capability • Have problem-solving capabilities • Have outstanding judgement, etc.
Leadership ability • Set constructive targets and lead the Company to achieve beyond them • Strong ability to communicate with other Directors, Audit & Supervisory Board Members, and employees • Ability to drive change, etc.
Personal qualities • Understand own strengths and weaknesses, able to collaborate with persons who possess qualities to compensate for qualities he or she lacks • Always prepared to learn

The basic policy regarding appointment/dismissal of Group representative is as follows.

• Evaluate the candidate through a sincere process using multifaceted and objective materials

• Examine in detail whether the candidate has the management capabilities required for solving management issues facing the Group companies

• Specifically check and evaluate the leadership style and ability of the candidate

4Training for Directors and Audit & Supervisory Board Members
[CGC Supplementary Principle 4.14.2]

The Company has built and implements a training system tailored to each position for its Directors, Audit & Supervisory Board Members, executive officers, and other officers and employees.
 Training for Directors covers corporate governance, relevant laws and regulations such as the Companies Act and the Financial Instruments and Exchange Act, which is also provided for executive officers who have responsibility for administrative divisions. The expenses for the training are borne by the Company.
 In addition, the Company’s Directors and Audit & Supervisory Board Members make use of all opportunities to train themselves through their own efforts, and the Company affords opportunities for improvement. The Company’s training policy for Directors and Audit & Supervisory Board Members is set out in the Guidelines for Directors and Audit & Supervisory Board Members.
 The Company provides Outside Directors and Audit & Supervisory Board Members with opportunities to visit the places of business of the major subsidiaries. (See Exchange of opinions with Outside Directors and Outside Audit & Supervisory Board Members)