2. Analysis and Evaluations of the Effectiveness of the Board of Directors

In order to strengthen corporate governance for the purpose of contributing to sustainable growth and enhancing corporate value over the medium to long term, the company analyzes and evaluates the effectiveness of the board of directors, recognizes issues that require further deepening and consideration, and works to make improvements with speed. We have made the following improvements to ensure independent outside directors are able to maximize their insight from a standpoint of independence from management and controlling shareholders.

• Establishment of the Nomination and Compensation Committee (2018)
  The majority consists of independent outside directors who advise and report on the nomination, compensation and development of directors.
• Establishment of the Governance Committee (2021)
  The Committee, consisting solely of independent outside directors, will clarify the supervisory and check-and-balance functions in important decision-making, and will confirm and report on the reasonableness and appropriateness of related party transactions.
• Establishment of the Management Strategy Advisory Committee (2021)
  Utilizing the knowledge of outside directors, the committee discusses in depth the strategies of the medium-term management plan and the company's management issues.
• Introduction of the Executive Officer System (2023)
  Separate management supervision from business execution and strengthen the supervisory function of directors.

The company will disclose a summary of the evaluation of the effectiveness of the board of directors as follows, and will continue its efforts to improve the effectiveness of the board of directors.

1.Evaluation method

We conducted a questionnaire with multiple choice and free-response questions for all directors. The Management Strategy Advisory Committee discussed the result of the questionnaire and an analysis of the responses by a third-party organization. The Governance Committee confirmed the results and analysis, which were then verified and discussed by the board of directors.

The structure of the questionnaire (major items) is as follows
(1) Roles and functions of the board of directors
(2) Size and composition of the board of directors
(3) Operation of the board of directors
(4) Relationship with audit organization
(5) Relationships with internal and external directors
(6) Relationship with shareholders and investors
(7) Comparison with the status as of the previous survey

In addition to the preceding, we also confirmed the advisory bodies to the board of directors (Nomination and Compensation Committee, Governance Committee), as well as the results of measures taken to address previous issues (executive officer system, role of the board of directors in formulating medium- to long-term strategies).

2.Assessment results

The board of directors was evaluated as generally effective, with active discussions by directors and corporate auditors with diverse insights and experience, and as a whole, the board of directors functions appropriately.

[Our strengths]
The evaluation confirmed the direction of agreement on many items, and also indicated that the PDCA cycle is being used to steadily resolve issues. In particular, we received high marks for effectiveness related to the checks-and-balances function of the Governance Committee, cooperation with audit organizations, and improved cooperation and information sharing between internal directors and outside directors.

[Our tasks]
The following points are considered issues that continue to require improvement and enhancement.

• Enhance discussions of medium- and long-term strategies
• Strengthen monitoring function to achieve the medium-term management plan and company-wide policies

3. Responding to Challenges

In order to resolve the above issues, the Company will increase opportunities to discuss medium- and long-term management strategies, which has been an ongoing issue. We will also revise the handling of monthly and quarterly financial reports to strengthen monitoring from a management oversight perspective toward achieving said strategies. In addition, the board of directors and each committee will consider measures related to other issues to further enhance the effectiveness of the board of directors.