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Evaluation of the Effectiveness of the Board of Directors

Basic Policy

The Company evaluates the effectiveness of its Board of Directors on a regular basis to identify issues and required improvements. Questionnaires and interviews for all directors and Audit & Supervisory Board members are conducted every year to evaluate and analyze the activities of the Board of Directors, the Nomination & Remuneration Advisory Committee, and the Audit & Supervisory Board, as well as the support system by the secretariat. The results are collected and analyzed by the secretariat of the Board of Directors.

Cycle for Continuous Improvement of Effectiveness

Cycle for Continuous Improvement of Effectiveness

Results of 2019 Evaluation

Evaluation results for the Board of Directors in 2019 show that while the overall evaluation of its management status, size and composition, and effectiveness was high, there is room for improvement in such areas as selection of agenda items facilitating discussions focused on important management issues and communication outside the Board of Directors, and a need for further reinforcement of the Board’s secretariat system.
In light of these results, we are continually working to improve the effectiveness of the Board of Directors and strengthen its monitoring functions by streamlining agenda items, sharing information during and between meetings to deepen discussions, improving operations, and reinforcing the secretariat system.
Results of the evaluation in 2020 will be disclosed once the aggregation and analysis are completed.

Ongoing Initiatives: Developing Succession Plans for the CEO, External Directors, and External Audit & Supervisory Board Members

Evaluations of the effectiveness of the Board of Directors have shown that the development of succession plans for the CEO is a task that should be continuously addressed by the Board of Directors and the Nomination & Remuneration Advisory Committee. The Company believes that the CEO should have the responsibility and authority to select his or her own successor and that the CEO should be in charge of drafting the succession plan. In addition, the Nomination & Remuneration Advisory Committee, which is responsible for certain functions of the Board of Directors, should receive full reports from the CEO on the succession plan and the candidates chosen. After an exchange of opinions, the committee should provide feedback to the CEO, evaluating the candidates from an independent standpoint and examining their appropriateness based on the management issues the Company is facing.
Furthermore, evaluations of the effectiveness of the Board of Directors have highlighted the need for developing succession plans for external directors and external Audit & Supervisory Board members, who play an essential role in monitoring the Company’s management. The Company believes that the development of succession plans, which should include oversight on various conditions pertaining to term of office and clear criteria for successor candidates, is an issue that should be constantly on the agenda of the Nomination & Remuneration Advisory Committee rather than something only addressed prior to the succession event.