CORPORATE GOVERNANCE[PDF:1.14MB]

CORPORATE GOVERNANCE

Governance Roundtable between the Chairman of the Board and Outside Directors

The Function of the Board of Directors and Governance in Achieving a Medium- to Long-Term Enhancement of Corporate Value

In April 2021, the Yamato Group launched a new Group management structure and engaged in structural reform of Group management aimed at the medium- to long-term enhancement of corporate value, as well as the creation of a corporate governance structure that supports this system. Masakatsu Mori, Mariko Tokuno, and Shiro Sugata, who are outside directors, and Masaki Yamauchi, who is the chairperson of the Board of Directors and the chairman of the Board, exchanged opinions on issues such as the type of governance Yamato should aim to realize and the important material issues the Group should engage in.

Masaki Yamauchi

Chairperson of the Board

of Directors

(Chairman of the Board)

CORPORATE GOVERNANCE

Masakatsu Mori		Mariko Tokuno		Shiro Sugata
Outside Director		Outside Director		Outside Director
				(Chairman of the
				Nomination and
				Compensation
				Committee)

  The Status of Governance at Yamato 

Discussions are lively and directors do not hold back from each other. As a result of disagreements during discussions of proposals on the executive side, I have witnessed a process that results in a more refined and complete

& Supervisory Board members in the management of

meetings. Recently, this has enabled us to also report on

the analysis of failed strategies and negative results of

projects. This is an example of how the initiatives have

Aiming to Strengthen the Functions of the Board of Directors and its Management Speed

Yamauchi

We have continued to engage in initiatives, such as positioning corporate governance as the foundation of enhancing corporate value and continuing to separate the supervision and execution of management, ahead of the revision of the Corporate Governance Code (hereinafter referred to as the "CG Code"). While we implement an annual evaluation of the effectiveness of the Board of Directors to confirm said effectiveness, we have become aware of the growing importance of discussion at Board of Directors meetings and the necessity of further deepening discussions of management issues and management strategies amid rapid changes to the business environment. As the chairman of the Board, I believe that I exist to fulfill this role.

I would like to ask the outside directors, what is your understanding of the current situation regarding Yamato's governance structure?

functions of the Board of Directors are being reinforced at all listed companies. Under these circumstances, I believe that we have been able to advance Yamato's corporate governance structure.

The Board of Directors has the key functions of making vital management decisions and supervising business execution. Regarding the former of these functions, we ensure the premise of setting topics of discussion in a timely and appropriate manner, share the necessary materials in advance of meetings, and thoroughly promote understanding of their content. In terms of the latter, there is a widespread belief that it is the responsibility of the president to report on the status of business execution as the chief executor. Each time, the president gives a detailed report on financial and non-financial information, as well as management issues. Additionally, we, the outside directors, can leverage our supervisory functions by making proposals based on these reports.

With regard to internal control, another key function of the Board of Directors, audits by the Audit & Supervisory Board and internal audits have been enhanced, and the opinions of outside directors have been reflected in many cases. As such, I believe that we have successfully established these three functions.

conclusion numerous times. However, to make this approach compatible with the speed of management, we need to accelerate our exchanges with the executive side. While we are making improvements, we hope to further increase speed.

Additionally, in our efforts to promote diversity in the Board of Directors, it is not only important to consider gender but also how extensive the experience and qualifications of each director is. Accordingly, while we are composed of diverse members, it is important that each director is constantly reconsidering their point of view and maintaining multiple standpoints. I have reaffirmed that this effort is essential to avoid falling behind the changing times.

Sugata

The enhanced pre-meeting briefings for the Board of Directors enable us, the outside directors, to draw reasonable conclusions from a full understanding of the meet- ings. The materials are intuitive and easy to understand through the use of charts and photographs. I believe that the process of creating these materials is a useful opportunity to deepen understanding of the Company's current status, not only for the outside directors but also for people within the Company.

worked effectively through the acceptance of opinions

from the outside directors.

However, if the questionnaire for evaluating the effec-

tiveness of the Board of Directors becomes an end in

itself, we may lose sight of the important essence of the

evaluation. We should ultimately evaluate the effective-

ness of the Board of Directors based on the improvement

of our medium- to long-term results and stock price.

Yamauchi

As everyone has already stated, we have had extremely lively discussions at Board of Directors meetings. Furthermore, the Board of Directors meeting has become a platform for deeper discussion, rather than simply a question and answer session, due to the enhancement of pre-meeting briefings. I recognize that we need to further reinforce this initiative to make it compatible with management speed.

As Mr. Sugata has pointed out, the approach of identifying issues through post-meeting reviews and verification is important for the decision-making process of the Board of Directors. I believe that the establishment of mechanisms to increase the effectiveness of strategies, such as discussion at Board of Directors meetings and advice from the executive side, is of great significance in terms of

Mori		Tokuno
In recent years, the CG Code has been introduced and	The Board of Directors is functioning soundly, and I feel
revised by the Tokyo Stock Exchange and the supervisory	that its effectiveness has been increasing year by year.

Additionally, evaluating the effectiveness of the Board of Directors has become a worthwhile mechanism for reflecting the opinions of the outside directors and Audit

reinforcing governance that supports the enhancement of corporate value.

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CORPORATE GOVERNANCE

Governance Roundtable between the Chairman of the Board and Outside Directors

CORPORATE GOVERNANCE

  Initiatives of the Nomination and Compensation Committee 

Introducing a Compensation System That Encourages the Enhancement of Corporate Value over the Short,

The second is a compensation structure that is linked to the medium- to long-term corporate value and stock price and that encourages a sense of common interests with all of our shareholders. As an incentive, we revised

Working toward a More Logical, Transparent, and Independent Appointment Process

Yamauchi

In 2005, Yamato established the Nomination and Compensation Committee, which has been managing the nomination and compensation of executives based on a system where independent outside directors make up a majority of the members and one serves as chairperson. First, I would like to ask about the nomination process. During the process of appointing and dismissing directors, including the president, what factors do you place importance on discussing in the Nomination and Compensation Committee?

Mori

While it is generally expected that a skilled president will serve for many years, regardless of term of office, it is also possible that a president could be replaced after a short

Sugata

It's advisable that the process for appointing outside directors has a high level of transparency and objectivity and is separate from management. This enables us to maintain independence and fully leverage supervisory functions. At Yamato, we have also designed a process for selection that is our vision for the Nomination and Compensation Committee.

First, we discuss the skills needed by a candidate for outside director and decide on personnel requirements. Based on these, we create a list of candidates that references opinions from both inside and outside the Company and rank them while taking various factors into account. We are making use of this new logical and transparent process to select candidates.

Additionally, incoming candidates for manager are a major theme of governance. As the Nomination and Compensation Committee, we hope to further deepen discussions regarding plans for succession.

Yamauchi

Medium, and Long Term

Yamauchi

Next, I would like the current chairman of the Nomination and Compensation Committee, Mr. Sugata, to explain the background and goals of the compensation system, which was revised in June 2020.

Sugata

Regarding the compensation of directors and Audit & Supervisory Board members, we decided to introduce a performance-linked,share-based compensation system in June 2020 and launched the system in the current fiscal year. There are two main aims for introducing this system.

The first is the provision of compensation that corresponds to the role and responsibilities of a position and performance as a result. To acquire and establish capable personnel, we need to have a competitive level of compensation compared with other companies.

the performance indicators and raised the percentage of performance-linked compensation (variable compensa- tion). The operating profit-based,performance-linked compensation that we had previously employed was insufficient in terms of reflecting corporate value. Therefore, we created a multifaceted evaluation system that separates the subjects of evaluation into the short and medium to long terms. To the former (short term), we added operating revenues and profit attributable to owners of parent, as well as operating profit, and the latter (medium to long term) includes ROE, TSR, and ESG indicators.

In addition, we will increase the objectivity and transparency of the process for determining compensation.

Tokuno

Yamato places importance on the form and process of its nomination and compensation of directors and Audit & Supervisory Board members, and I believe that it has reached a point where it is comparable with, or even one step ahead of, its competitors.

period of time, depending on their work style. The core of governance is the selection and evaluation of a president. The responsibility for this lies with the Nomination and Compensation Committee.

Since Mr. Mori took the position as the chairman of the Nomination and Compensation Committee, the process for selecting outside directors has become a clearer and more logical and transparent process performed by an

  Realization of Sustainable Growth and the Enhancement of Corporate Value 

The point I have just raised applies not only to the president but also to all of the directors. To build a strong board of directors, I believe that we should make judgments on whether to appoint and reappoint directors according to their individual qualities and contributions. Additionally, once we have selected a president or executive officer, we need to respect the executive members we have selected.

independent advisory committee. Under the recently appointed chairman, Mr. Sugata, we will further advance reforms to achieve better governance. Additionally, I hope to improve the process itself while listening to the opinions of the outside directors regarding plans for succession.

Pursuing Unique Value as Part of

a Growing Industry and a Social

Infrastructure Company

Yamauchi

Yamato is currently promoting its medium-term management plan "One Yamato 2023." What kind of issues do you think are especially important for realizing sustainable growth and the enhancement of corporate value amid the harsh business environment surrounding the Yamato Group?

Mori

At Board of Directors meetings, we discussed and developed the strategy "One Yamato 2023." We placed particular importance on three points from this strategy.

The first point is proactive investment. Yamato is part of a growing industry and we should proactively make investments with awareness of the favorable position we

are in. Going forward, we need to further enhance corporate value through expanding the business by proactively carrying out investments following the reorganization of the delivery industry.

The second point is the pursuit of capital efficiency. It is necessary to continue optimizing our business portfolio by placing further importance on capital efficiency in business management.

The third point is the promotion of sustainable man- agement. As a social infrastructure company, Yamato holds significant social responsibility. We should pursue the creation of new value while actively incorporating both ESG and SDG perspectives.

Tokuno

Sustainable Medium-Term Plans 2023 includes a number of elements that are signs of growth. While the plans are scheduled to run until the fiscal year ending March 31, 2024, the content is based on a long-term outlook beyond that period and should be strongly promoted.

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CORPORATE GOVERNANCE

Governance Roundtable between the Chairman of the Board and Outside Directors

CORPORATE GOVERNANCE

Additionally, Yamato is a company that supports Japan through its logistics infrastructure. The Group has a consolidated 220,000 employees and has a strong presence in people's daily lives. Conversely, we must be conscious of the effect Yamato's behavior has on society. Sustainability initiatives that aim to establish an appropriate work environment and contribute to all of society are important. I believe that, in the face of these various issues, we can find a new direction for growth.

Sugata

First, it is important to steadily promote the current structural reform. On top of that, there are four themes that we should engage in going forward.

The first theme is the cultivation of new business domains involving digital transformation (DX). Our DX initiatives so far have been centered on "internal DX" and have contributed to improving productivity and efficiency. Additionally, I believe that "external DX," the development of new digital services and products based on various types of information accumulated within the Group, represents another major potential opportunity for achieving sustainable growth.

The second theme is the promotion of automation through laborsaving initiatives. As society sees a major decrease in population, we also expect a labor shortage within the logistics industry. To get a head start, we must continue to promote laborsaving initiatives by improving operational efficiency from a wide range of aspects.

The third theme is the restructuring of overseas strate- gies. As part of our structural reform, we withdrew from unprofitable businesses overseas and focused our man-

agement resources on areas such as domestic e-commerce and corporate business. However, a company the size of the Yamato Group should aim to become a global company over the medium to long term, so we must reconsider our overseas strategies in the future.

The final theme is the current daily issue of ensuring a stable supply of logistics services. The most serious responsibility of a social infrastructure company is to provide services and products without interruption. Taking into account the impact of climate change over recent years, the need for business continuity planning is likely to increase. Regardless of the situation, Yamato must regularly increase its strength and resilience to enable the maintenance of its logistics services.

Yamauchi

As Mr. Mori always says, our position as a company in a growing industry is a strength we should be utilizing fur- ther. Your observation regarding the importance of capital efficiency is an issue that we will continue to address.

Furthermore, as each of you have identified, by supporting the logistics of the entire country, the Yamato Group is a company responsible for social infrastructure. I hope that we can further reinforce sustainable management through ESG initiatives and the SDGs, take responsibility for issues such as business continuity, and meet the expectations of our stakeholders.

The first step to achieving sustainable growth is the

steady accomplishment of our medium-term management plan "One Yamato 2023." We will appropriately monitor and support the execution of this process as the Board of Directors.

functions) and the accelerator (the support of the executive side) are two halves of a whole. Because we apply the brake appropriately, this also enables us to accelerate as needed.

Sugata

When considering the issues surrounding governance, it is often easy to confuse goals with methods. The individual actions that are concrete examples of governance are no more than the methods. The ultimate goal of governance, in other words its essence, is to quickly carry out proper decision-making. Additionally, while the Board of Directors is often said to have two functions, supervision and decision-making, I remember feeling uncomfortable with the word "supervision."

The people who run companies and deliver services and products to the world are all professionals in their fields. Our purpose as outside directors is to mediate as "outside entities" among these people. Rather, we essentially provide support as a "catalyst" that enables them to properly make more efficient decisions and act as a "check" to ensure that they do not go in the wrong

medium-term management plan "One Yamato 2023," the process of which the Board of Directors will monitor. The primary issues we will be monitoring at this time will be risk management, the soundness of labor and management and of shareholders, and sustainability initiatives, including the SDGs, and business continuity. As management conditions have become increasingly uncertain, it is particularly important to further reinforce risk management.

At the same time as these initiatives, we must also increase the transparency of management and fulfill our responsibility of providing explanations for our shareholders and investors. Our integrated reports are also a tool for this purpose. Communication is definitely more important than anything.

Yamauchi

Today I received numerous suggestions from all of your unique perspectives. A number of key points stood out, including the sharing of information, a sound relationship with stakeholders, sustainability, and transparent manage- ment. Furthermore, to sustainably achieve enhanced cor-

  Further Enhancement of Corporate Governance 

direction.

porate value, we will engage in improving risk

Examining the Nature of Governance and the Role of Outside Directors

Yamauchi

Finally, what is necessary for Yamato's governance to function sufficiently? Also, what kind of role should outside directors fulfill?

Tokuno

The most important requirement for functioning corporate governance is the proper sharing of information. This has two meanings. The first is the sharing of information

052	YAMATO HOLDINGS CO., LTD.
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between the Company and shareholders and investors. The second is the sharing of information between inside and outside directors.

Regarding the former, Yamato is expanding dialogues with shareholders and investors. By holding regular dia- logues, I believe that we can deepen mutual understand- ing. The proper exchange and sharing of information is essential for smooth communication and for governance as a whole.

Meanwhile, the latter is necessary because it acts as a brake for the executive side. Applying the brake at the appropriate time, without hesitation, is an important responsibility for the outside directors. Accordingly, we must properly share information. The brake (supervisory

The "checking" function is based on all of our stake- holders, including shareholders and investors. While being are aware of this position, outside directors will demonstrate a concrete checking function by utilizing their knowledge cultivated through social trends and company management.

Mori

The ultimate goal of governance is to sustainably enhance corporate value over the long term. For Yamato to achieve this, we must make steady progress with our

management and demonstrate a healthy entrepreneurial spirit, rather than turning to excessive risk aversion, after identifying multifaceted risks. I believe that we must strive to be a board of directors that supports this.

I would like to thank you for all the valuable opinions you shared today from various angles. Going forward, I will continue endeavoring to further enhance and improve the effectiveness of the Board of Directors as a forum for free and open discussion that leads to enhanced corporate value.

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CORPORATE GOVERNANCE

Corporate Governance

Basic Position on Corporate Governance

Based on its corporate philosophy, the Yamato Group	effectively utilizing the management resources of the
carries out business activities in accordance with the law	Group is one of the top priorities of management, and we
and social norms and actively promotes compliance man-	have implemented measures and bolstered management
agement. Striving to maximize corporate value by	systems as part of our corporate governance initiative.

Corporate Governance System (As of July 1, 2021)

CORPORATE GOVERNANCE

Management Structure

							Expertise and experience
			Nomination and			Human		Legal affairs
			Compensation	Corporate	Marketing and	resources	Finance and	IT and digital
Name	Position	Outside	and risk	Global
Committee	management	sales	and labor	accounting	technologies
			management
			member			management
Masaki Yamauchi	Chairperson of the
Board of Directors

Representative

Yutaka Nagao Director, Executive

Officer and President

Representative

Kenichi Shibasaki Director, Executive

Officer and Vice

President*

The Company is a Company with an Audit & Supervisory Board. In addition to important management decision- making and the supervision of business execution by the Board of Directors, Audit & Supervisory Board members and the Audit & Supervisory Board, which are independent from the Board of Directors, shall audit the status of the execution of duties by directors.

Also, to supplement the supervisory functions of the

Board of Directors, the Company established a Nomination and Compensation Committee comprising a majority of independent outside directors. At the same time, the Company has separated the supervision and execution of management and adopted an executive officer system to ensure even more prompt decision-making related to business execution.

Haruo Kanda	Director
Masakatsu Mori	Director
Mariko Tokuno	Director
Yoichi Kobayashi	Director
Shiro Sugata	Director
Noriyuki Kuga	Director

System	Company with an Audit & Supervisory Board
Number of directors	9
Outside directors	5
Number of Audit & Supervisory Board members	5
Outside auditors	3
Term of directors	1 year
Voluntary advisory committees	Yes (Nomination and Compensation
Committee)
Executive officer system in place	Yes
Independent auditor	Deloitte Touche Tohmatsu LLC

Composition of the Board of Directors, Audit & Supervisory Board, and Nomination and Compensation Committee

Yoshihiro Kawasaki	Full-time Audit &
Supervisory Board
	Member
Mamoru Matsuno	Full-time Audit &
Supervisory Board

	Member
Takashi Yamashita	Audit & Supervisory
Board Member
Ryuji Matsuda	Audit & Supervisory
Board Member

Yoshihide Shimoyama Audit & Supervisory

Board Member

*Representative Director from February 2022

Corporate Governance Framework

Outside directors

5 members (56% of all directors)

Outside Audit & Supervisory Board members		Outside directors
3 members (60% of Audit & Supervisory		4 members (67% of Nomination and
Board members)		Compensation Committee members)

General Meeting of Shareholders

Board of

Directors

Inside directors

4 members (44% of all directors)

Audit &

Supervisory

Board

Inside Audit & Supervisory Board members 2 members (40% of Audit & Supervisory Board members)

Nomination

and

Compensation

Committee

Inside directors

2 members (33% of Nomination and Compensation Committee members)

Elect

Elect

Elect

Audit &

Nomination and

Compensation

Supervisory

Coordinate

Audit

Board of Directors

Committee

Board

Independent

Report

Report

Legal

Make decisions / Supervise

Propose / Report

	Change in the Composition of the Board of Directors
	July 1, 2011				As of July 1, 2022
			Ratio of			Ratio of
			outside			outside
			directors			directors
	4 inside directors	33%		4 inside directors	56%
	2 outside directors			5 outside directors (including 1 female outside director)
054	YAMATO HOLDINGS CO., LTD.
Integrated Report 2021

Auditor

Executive

Management Committee

CSR Division

Advisor

Accounting

Conference

audit

Report

Propose / Report

Execute

Execute

business

business

Audit Division

Group Companies

Internal

audit

YAMATO HOLDINGS CO., LTD.

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Integrated Report 2021

CORPORATE GOVERNANCE

Corporate Governance

Efforts to Improve Corporate Governance

Management Strategy

DAN-TOTSUThree-Year

DAN-TOTSUThree-Year

KAIKAKU 2019 for

YAMATO NEXT100

Plan HOP

Plan STEP

NEXT100

One Yamato 2023

2002-

2011-

2014-

2017-

2020- (YAMATO NEXT100)

2021- (One Yamato 2023)

Board of Directors and Audit & Supervisory Board

Implemented evaluation of effectiveness of the Board of Directors (June 2016)

Shortened the term of directors to one year (June 2003)

Appointed a female outside director (June 2017)

Transitioned to a structure in which outside directors made up one-third of all directors (June 2015)

Appointed outside directors (June 2005)

Transitioned to a structure in which outside directors

comprised one-half of all directors (June 2019)

Appointed outside members as the majority of

members on the Board of Directors (June 2020)

Appointed outside members as the majority of mem-

bers on the Audit & Supervisory Board (June 2020)

Committees, etc.

CORPORATE GOVERNANCE

						Attendance at meetings of
		Independent	Nomination and	Concurrent posts		the Board of Directors and/
	Name	Compensation	Overview of Reasons for Appointment and Expected Roles	or Audit & Supervisory
	officer	(As of June 24, 2021)
		Committee		Board during the fiscal year
						ended March 31, 2021
				• Representative of	The Company has elected Takashi Yamashita as an outside Audit &	Board of Directors:
	Takashi		-	Takashi Yamashita CPA Office	Supervisory Board member in order to draw on his expertise related	18 of 19 meetings
OutsideAudit & BoardSupervisorymembers	Yamashita		• Outside Director of Shin Nippon	to finance and accounting as a certified public accountant with	Audit & Supervisory
Yoshihide			• Outside Audit & Supervisory	experience as a member of the Board of Directors and an outside Audit	15 of 15 meetings
				Biomedical Laboratories, Ltd.	respect to the Company's audit structure.	Board:
						18 of 18 meetings
					The Company has elected Ryuji Matsuda as an outside Audit &	Board of Directors:
	Ryuji		-	• Attorney-at-Law of Matsuda Law	Supervisory Board member in order to draw on his sophisticated exper-	Audit & Supervisory
	Matsuda		Office
			tise as a lawyer with respect to the Company's audit structure.	Board:
						16 of 16 meetings
					The Company has elected Yoshihide Shimoyama in order to draw on his	Board of Directors:
	Shimoyama		-	Board Member of	& Supervisory Board member at other companies with respect to the	Audit & Supervisory
				NIPPON HUME CORPORATION	Company's audit structure.	Board:
					16 of 16 meetings

Board of Directors

				Established the Nomination and Compensation Committee (June 2005)
						Established the Compliance and Risk Committee (August 2006)
Corporate Structure and Other Systems and Initiatives				Abolished advisor position (June 2018)
		Introduced executive officer system (June 2004)		Established Corporate Governance Guidelines (September 2015)

Eliminated retirement benefit system for corporate officers (June 2004) Implemented corporate officer training (October 2015)

		Disclosed ROE target in medium-term management plan (January 2005)		Decided to revise officer compensation system
		Introduced performance-linked compensation system (April 2005)		and introduce a performance-linked,share-based
			compensation system (June 2020)
		Transitioned to a pure holding company (November 2005)
				Introduced succession plans (July 2006)

Concurrent Posts and Main Activities of Outside Directors and Outside Audit & Supervisory Board Members

			Nomination and			Attendance at meetings
		Independent	Concurrent posts		of the Board of Directors
	Name	Compensation	Overview of Reasons for Appointment and Expected Roles
	officer	(As of June 24, 2021)	during the fiscal year
		Committee
					ended March 31, 2021
				• Senior Advisor of International	Masakatsu Mori possesses abundant experience and considerable
				insight as a corporate manager, particularly in the fields of finance and
				University of Japan
				accounting, IT and digital technology, and global business. Accordingly,
				• Outside Director of Stanley
	Masakatsu			the Company has determined that utilizing this insight to furnish
			Electric Co., Ltd.
			oversight and advice from a managerial standpoint, particularly regard-	19 of 19 meetings
	Mori			• Outside Director of Kirin
			ing matters of management strategy, overall encompassing business
				Holdings Company, Limited
				execution, business strategy, financial strategy, and sustainability
				• External Statutory Auditor of
				strategy, will contribute to further enhancing our management struc-
				FAST RETAILING CO., LTD.
				ture, and for this reason, he has been elected as an outside director.
					Mariko Tokuno possesses abundant experience and considerable
					insight as a corporate manager, particularly in the fields of marketing
				• Outside Director of	and sales and global business. Accordingly, the Company has deter-
				mined that utilizing this insight to furnish oversight and advice from a
	Mariko			Happinet Corporation
			managerial standpoint, in addition to the standpoint of customers and	19 of 19 meetings
	Tokuno			• Outside Director of
			employees, particularly regarding business execution, business strategy,
				Mitsubishi Materials Corporation
				and human resource strategy, will contribute to further enhancing our
					management structure, and for this reason, she has been elected as an
					outside director.
Directors					Yoichi Kobayashi possesses abundant experience and considerable
				insight as a corporate manager, particularly in the fields of marketing
					and sales and global business. Accordingly, the Company has deter-
Outside	Yoichi			-	mined that utilizing this insight to furnish oversight and advice from a	19 of 19 meetings
Kobayashi			enhancing our management structure, and for this reason, he has been
				managerial standpoint, particularly regarding business execution,
					business strategy, and investment strategy, will contribute to further
					elected as an as outside director.
					Shiro Sugata possesses abundant experience and considerable insight
					as a corporate manager, particularly in the fields of marketing and
				• Outside Director of JSR	sales, IT and digital technology, and global business. Accordingly, the
				Company has determined that utilizing this insight to furnish oversight
	Shiro			Corporation
		(Committee	and advice from a managerial standpoint, particularly regarding busi-	19 of 19 meetings
	Sugata		• Outside Director of Yokogawa
		Chair)	ness execution, business strategy, increasing productivity, and cost
			Electric Corporation
				structure reform, will contribute to further enhancing our management
					structure, and for this reason, he has been elected as an outside
					director.
					Noriyuki Kuga possesses abundant experience and considerable insight
					as a corporate manager, particularly in the fields of personnel and labor
					management, finance and accounting, and global business. Accordingly,
	Noriyuki		-	-	the Company has determined that utilizing this insight to furnish	15 of 15 meetings
	Kuga		oversight and advice from a managerial standpoint, particularly regard-
					ing business execution, financial strategy, and corporate governance,
					will contribute to further enhancing our management structure, and for
					this reason, he has been elected as an outside director.

Note: Shiro Sugata took on the role of the chairman of the Nomination and Compensation Committee from June 24, 2021, taking over for Masakatsu Mori.

Roles and duties

The Board of Directors shall make important decisions concerning the Company's business and supervise the execution of duties by executive directors and executive officers.

The Board of Directors shall recognize the medium-term management plan as one of the commitments to shareholders and supervise the effectiveness of strategies, such as the Company's business portfolio and the optimal allocation of management resources, to achieve the goals of this plan. Moreover, the Board of Directors shall sufficiently analyze the initiatives aimed at realizing the goals of the medium-term management plan as well as the extent to which the plan's objectives are being achieved. In addition to providing explanations to shareholders, such analyses shall be reflected in future management plans.

The Board of Directors shall encourage executive officers to demonstrate a healthy entrepreneurial spirit and to not excessively avoid or curb risk, while at the same time establishing a framework that enables it to ensure accountability.

The scope of responsibility of each executive officer shall be decided and disclosed by the Board of Directors. Executive officers shall execute business in accordance with internal regulations.

Management

To allow Board of Directors meeting attendees the opportunity to prepare for meetings in advance, the Board of Directors secretariat shall send agenda items and related materials to directors well in advance of the meeting date and provide explanations in advance as needed.

The annual schedule of Board of Directors meetings as well as anticipated agenda items shall be decided in advance, and this information shall be provided to directors and Audit & Supervisory Board members.

The number of issues to be deliberated as well as the frequency of meetings shall be appropriately set, and the time of meetings shall be decided so as to allow sufficient time for deliberations.

As needed, meetings comprising Board of Directors

meeting attendees shall be held for the purpose of exchanging ideas, thereby encouraging lively debate.

Evaluation of effectiveness

To verify the effectiveness of the Board of Directors, the Company surveys all directors and Audit & Supervisory Board members on an annual basis regarding the composition and operational status of the Board of Directors. Based on the survey results, the Company carries out an evaluation on the Board's effectiveness in terms of such matters as the condition of the Board's operation and the state of deliberation held at Board meetings. From the fiscal year ended March 31, 2020, in addition to the survey, the chair (chairperson of the Board of Directors) has begun performing interviews to further enhance the usefulness of the evaluation.

Results of Evaluation for the Fiscal Year Ended March 31, 2021

In the effectiveness evaluation for the fiscal year ended March 31, 2021, the Company received an evaluation that the composition, management conditions, and deliberation conditions of the Board of Directors were largely appropriate as a system where the Board of Directors serves as the oversight function, and that a culture where attendees actively speak up and engage in unrestricted discussions at the Board of Directors meeting had taken hold.

Based on these results, the Company has confirmed that the Board of Directors has been able to display an effectiveness that contributes to securing sound management and achieving prompt and accurate decision-making and business execution, which are the Company's basic policies for corporate governance.

With regard to the medium-term management plan "One Yamato 2023," which was announced in January 2021, the Board of Directors conducted proactive exchanges of views and had exhaustive discussions on the effectiveness of this plan based on the changes to the external environment since the formulation of the transformation plan "YAMATO NEXT100." The Company will regularly monitor the progress of the medium-term management plan,

056	YAMATO HOLDINGS CO., LTD.
Integrated Report 2021

YAMATO HOLDINGS CO., LTD. 057 Integrated Report 2021