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Ensuring Effectiveness of the Board of Directors

The Company believes that a truly effective Board of Directors requires exhaustive discussions at the Board meetings upon sharing appropriate information with external directors regarding the Company’s basic management policy and important management matters. Important management matters are carefully deliberated by the Board over a number of meetings including offsite meetings, ensuring that formulated policies and decisions are backed by a sufficient amount of information and deliberation.
The Company also places particular importance on the diversity of its directors and Audit & Supervisory Board members, with the belief that diverse opinions stemming from various expertise and insights result in versatile discussions, which are indispensable for an effective Board.

Topic One: Medium-to-Long-Term Strategy WIN 2023 and Beyond

On February 9, 2021 the Company announced its medium-to-long-term strategy, WIN 2023 and Beyond. The formulation of this strategy, which defines the basic policy of the Company for the medium and long term, required particularly detailed considerations and discussions based on the opinions of both internal and external directors with a wide range of perspectives. Therefore, in addition to discussions by the Board of Directors, several discussion meetings were held with external directors to deliberate the new strategy. The meetings encompassed a considerable amount of questions and recommendations, as well as exhaustive discussions related to the Company’s issue awareness and strategic proposals, their purpose, overall direction of initiatives, and matters requiring further consideration. These discussions have been incorporated not only into WIN 2023 and Beyond overall, but also into each of the initiatives based on this strategy.

Topic Two: Transfer of Shiseido’s Personal Care Business and Joint Venture Establishment

On February 3, 2021 the Company announced the transfer of its Personal Care business to a legal entity financed by funds advised by CVC Asia Pacific Limited and its subsidiaries. Following the transfer, the Company will stay involved in the Personal Care business as a shareholder of the new company which will operate the business. This matter was discussed at a number of the Board meetings in order to determine the strategic positioning of the Personal Care business in the Company’s portfolio, possible scenarios for its development, selection of candidates for the transfer, and other issues. Among these topics, the transaction was discussed with particular consideration from the following aspects: significance and appropriateness of selection of the transferee, business plan following the joint venture, continued employment and treatment of the employees involved with the business, ability to increase the value of the business and provide opportunities to its employees. Information regarding the status of the project was regularly shared with directors and Audit & Supervisory Board members on various occasions not limited to the Board meetings. The final decision was reached upon unanimous agreement of all attendees that this is the best option among possible scenarios.

The Company’s external director Yoshiaki Fujimori concurrently serves as Senior Executive Advisor of the transferee’s related company. In order to ensure the fairness of the transaction, he did not participate in any related deliberations or determinations of the Board of Directors of the Company, nor did he participate in any information sharing, discussions, consultations or negotiations with CVC held by the Company pertaining to the transaction.