Corporate Governance Structure

The Company has long been committed to improving the corporate governance through a range of initiatives including the adoption of governance system aligned with the “monitoring board-type system” where the board is putting more focus on oversight responsibilities to ensure transparency and fairness in governance practice, while ensuring effective strategic planning and timely execution thereof. We take this effort a step further, the Company has transited to a Company with Three Statutory Committees in order to maximize corporate value based on resolution of the Ordinary General Meeting of Shareholders held on March 26, 2024.

The Board of Directors focus on determining the basic management policy and management strategy while overseeing the implementation thereof, while also delegating significant authority to the Corporate Executive Officers, thereby accelerating the decision-making process for executing the Company’s business and implementation of its business strategies.

In addition to the above structure, with the recognition that promoting of the Three Lines Model contributes to strengthening corporate governance, the business department on the first line, the HQ Corporate departments and the regional headquarters on the second line and the Internal Audit Department on the third line work together while aiming to promote healthy growth strategies and enhance sustainable corporate value, and establishment and improvement of risk scenarios and risk mitigation activities are continuously carried out.

Of eleven Directors, seven (7) members (64%) are highly independent External Directors who meet the “Criteria for Independence of External Directors” of the Company. Furthermore, of the four internal Directors, two (2) are Directors responsible for business execution and concurrently serve as Corporate Executive Officers, and two (2) are non-executive Directors.
The total number of non-executive Directors, both internal and external, is nine (9)(82%).

The Company establishes its own “Criteria for Independence of External Directors” (the “Criteria”) with reference to foreign laws and regulations and listing rules, etc. for the purpose of making objective assessment on the independence of the External Directors.
In connection with selecting candidates for External Directors, the Company places emphasis on a high degree of independence of the candidate from the viewpoint of strengthening corporate governance and accordingly, the Company makes judgment on whether the candidate has a high degree of the independence in accordance with the Criteria.

While our ultimate goal is to realize our corporate mission, “BEAUTY INNOVATIONS FOR A BETTER WORLD,” in response to the recent rapid changes in the external environment, we have formulated and are implementing the “Action Plan 2025-2026,” which consists of three pillars: “Reinforce Brand Foundation,” “Rebuild Profitable Foundation,” and “Enhance Operational Governance,” with the aim of building a resilient business model for stable profit growth amid volatile market conditions.

The Company believes that the Board of Directors’ oversight of the executive division and provision of advice to management are critical elements for realizing and achieving our corporate mission and management plans, and in order to fulfill these expected roles, the Company has defined the knowledge and expertise required for the entire Board of Directors and each Director as specified in the following links.

In selecting candidates for Director, the Company prioritizes the required knowledge and insights while also aiming for a high degree of diversity among its members in terms of background and experience, ensuring that the Board of Directors is composed of diverse individuals.

The Board of Directors meetings are held approximately once a month. It focuses on deciding basic management policy and management strategy, and overseeing the implementation thereof to reinforce the oversight function and accelerate overall business execution of the Company in a rapidly changing environment. In addition, the Board of Directors discusses and decides matters stipulated in laws and regulations/the Company's Articles of Incorporation as well as matters provided for in the Regulations of the Board of Directors and delegate the authority to decide on other matters to Representative Corporate Executive Officers or Corporate Executive Officers.
The Company’s Board of Directors is composed of eleven (11) Directors including seven (7) External Directors.
We held the Board of Directors meetings fourteen (14) times in fiscal year 2024.

From the executive side, proposals and reports were made primarily regarding the review of the medium-term management strategy and strategic actions, structural reforms and M&A along with their progress, the progress of the new core system (FOCUS), significant risks of the Shiseido Group, and IR activities (such as sharing investor feedback). In addition to these discussions, regular reports were provided by the nomination, compensation and audit committees. Accordingly, the Board of Directors effectively performed the oversight function. In addition to the abovementioned fourteen (14) meetings of the Board of Directors, pursuant to the provisions of Article 370 of the Companies Act and Article 26, Paragraph 2 of the Company's Articles of Incorporation, there were two deemed resolutions where a resolution at a Board of Directors meeting is deemed to have been passed.

Shiseido conducts an annual evaluation of the effectiveness of the Board of Directors to identify issues and areas for improvement and evolve into a more effective board. Based on the findings of the board evaluation, we are hard at work to strengthen the functions and improve the Board's effectiveness through the following PDCA cycle.

The Nominating Committee resolves matters such as proposals regarding appointment and dismissal of directors to be submitted to general meetings of shareholders and matters regarding the succession of directors. In addition, the Nominating Committee deliberate appointment and dismissal of the representative Corporate Executive Officers and Corporate Executive Officers, areas for which Corporate Executive Officers take responsibility, appointment and dismissal of the CEO, as well as matters regarding the succession of the CEO etc. and reports results of the deliberations to the Board of Directors.
The Committee is composed of four (4) External Directors and its chairperson is selected from the committee members with the resolution of the Nominating Committee.

We held the Nominating Committee meetings eight (8) times in 2024.
It mainly discussed the succession of Directors, made resolutions regarding the selection of Director candidates to be submitted to the shareholders' meeting, and monitored the implementation status of the CEO succession. Additionally, it deliberated on matters related to the appointment of the CEO, the selection of the Representative Corporate Executive Officers and Corporate Executive Officers, and the determination of the areas of responsibility for the Corporate Executive Officers, providing recommendations to the Board of Directors.

The Compensation Committee resolves policies on decisions regarding remuneration of Directors and Corporate Executive Officers, designs of the remuneration policy for Directors and Corporate Executive Officers, and details of remuneration to individual Directors and Corporate Executive Officers, etc.
The committee is composed of four (4）External Directors and its chairperson is selected from the committee members with the resolution of the Compensation Committee.

We held the Compensation Committee ten (10) times. It mainly discussed and resolved matters regarding the design of the CEO's compensation, changes to the performance indicators for long-term incentives, and the compensation of Directors and Corporate Executive Officers. Additionally, it oversaw the determination of compensation for Executive Officers other than Directors and Corporate Executive Officers.

The Audit Committee conducts audit and prepares audit reports on performance of duties of Directors and Corporate Executive Officers, etc., and makes decisions on proposals for appointment, dismissal, or non-reappointment of accounting auditors submitted to General Meetings of Shareholders.
The committee is composed of three (3) External Directors and two (2) full-time Audit Committee members, and its chairperson is an External Director selected from the committee members with the resolution of the Audit Committee.

Corporate Executive Officers are responsible for business execution based upon the delegation from the Board of Directors. The Company will expedite decision-making regarding business execution and implementation of business strategies by delegating significant authority to Corporate Executive Officers.

In addition, the Company has established committees to discuss and decide important matters related to business execution of the Company.
The major committees are as follows: