Ensuring Management Transparency

The Company has established the Nomination and Compensation Committee as a voluntary advisory body to the Board of Directors in order to strengthen fairness, objectivity, and transparency in the evaluation and decision-making process regarding nomination and compensation of directors, etc. and to further enhance the corporate governance system.
The Nomination and Compensation Committee shall, in response to the Board of Directors' inquiries, deliberate and report on matters related to the election and dismissal of directors, the selection and dismissal of representative directors, etc., matters related to the compensation of directors, etc., and other matters for which the Board of Directors has provided advice.
The Nomination and Compensation Committee consists of at least three members, a majority of whom are independent outside directors. The chairperson of the committee shall be elected by a resolution of the Board of Directors from among the independent outside directors.
The matters that the Nomination and Compensation Committee discusses and reports to the Board of Directors in consultation with the Board of Directors are as follows:

• - Deliberations on revisions to the executive compensation system
• - Deliberation on the performance evaluation and payment amount of performance-linked monetary remuneration (annual bonus) for the fiscal year ended June 2023
• - Deliberation on the incentive curve for performance-linked monetary remuneration (annual bonus) for the fiscal year ended June 2024
• - Deliberations on the Company's policy for determining the compensation of individual directors
• - Deliberation on disclosure matters, etc.

In the selection and dismissal of senior management and nomination of candidates for directors (excluding those who are members of the Audit and Supervisory Committee), the Nomination and Compensation Committee deliberates and reports to the Board of Directors, which then decides on the nominees from the viewpoint of the right person for the job, taking into consideration the ability, experience, and personality of the candidate, in light of their ability to make decisions quickly in response to rapidly changing business environments and to supervise appropriate risk management operations. In nominating candidates for Directors as members of the Audit Committee, the Board of Directors determines the nominees after a comprehensive review in consultation with the Audit Committee, taking into consideration the supervisory function of business execution, while ensuring a balance of knowledge of finance and accounting, diverse perspectives on corporate management, and other factors.

The Board of Directors shall evaluate the effectiveness of the Board of Directors at least once a year. In the fiscal year ended June, 2024, the Company assessed the effectiveness of the Board of Directors through the following process. The results showed the members of the Board of Directors play an effective role in improving the corporate value over the medium and long term by making appropriate and prompt decisions through active discussions based on the management philosophy, and by exercising strict supervisory functions including monitoring of the internal control system. While the balanced composition of the Board of Directors, the environment that fosters open discussions, and the active initiatives related to diversity are positively recognized, there is a need for further enhancement in the discussions on certain topics. This includes reviewing the methods of presenting agenda items and improving the reporting of outcomes, as well as enriching discussions from a company-wide perspective In the preparation, collection, and partial analysis of the questionnaire, we used an external organization to increase the transparency of the evaluation and ensure its effectiveness.

• - Balanced composition of the Board of Directors based on diverse skills and expertise.
• - Integration of the corporate philosophy Genryu to foster an environment for open discussions.
• - Enhancement of discussions related to gender and diversity initiatives.

• - Further enhancement of discussions on the medium- to long-term management strategies and talent development.
• - Improvement of outcome reports concerning previously discussed matters, such as investment projects.

The Company appoints directors who are knowledgeable and experienced in various fields, including laws and regulations, finance, and accounting, which are required of Directors, and who are capable of fulfilling their roles and responsibilities. We have established a system to appropriately report and provide various types of information to Directors even after their appointment, and provide them with opportunities to receive explanations directly from lawyers, accountants, and other experts, as well as consultants on ESG issues, and hold training sessions as necessary.