We, at the MIRAIT ONE Corporation, recognize the importance of management as a socially-responsible company and have put in place organizational structures and systems to ensure transparency and fairness in decision-making. Building relationships founded in trust with all of our stakeholders including shareholders is positioned as the most important aspect of management.

We consider the realization of effective corporate governance is indispensable for building trust relationship with stakeholders.

Therefore, we

We are a company with an Audit and Supervisory Committee, overseen by a board of directors, an audit and supervisory committee, and accounting auditors.

We have set up a system for reciprocal cooperation where the Audit and Supervisory Committee together with an internal audit section and accounting auditors each perform independent inspections.

Also, we are working to improve the corporate value by strengthening the governance and the internal audit structure based on the policy of three-lines of defense, strengthening corporate governance through tight liaison of the Audit and Supervisory Committee and the internal audit section, improving healthiness and transparency of management, and making quick decisions.

In the nomination process of candidates for the board of directors, the MIRAIT One Corporation selects a wide variety of candidates from both inside and outside of the company, consults with the Nomination and Compensation Committee chaired by an independent outside director, and determines the candidates who have excellent personalities, superior insights and high managerial capabilities, at the board of directors meetings based on the replies from the Committee.

* The rationale for selection of each director is outlined in the notice of general meeting of shareholders.

For outside directors, we appoint individuals who have abundant experience and knowledge across different fields who can perform their roles and duties with a specialized and objective viewpoint by providing guidance and management oversight from the perspective of enhancing the Company’s medium- to long-term corporate value. For independent outside directors who serve on the Audit and Supervisory Committee, we appoint those who have abundant experience and knowledge across different fields and who can properly supervise the Board of Directors’ managerial decisions, execution of duties, and compliance with laws and regulations with independent and objective views, thereby enhancing the transparency of the Board of Directors and serving greater corporate value.

Outside directors attend meetings, including Board of Directors meetings, to understand the Group’s management issues.

In addition, they offer their opinions from their respective professional and objective viewpoints as needed, and strive to ensure transparency and efficiency in management by exchanging views with other directors.

* The criteria for determining the independence of outside directors of the Company and the status of their activities are provided in the “Corporate Governance Report” and other documents.

As a business holding company that oversees various business fields, the Company ensures that the composition of the Board of Directors is well-balanced by appointing individuals with a wealth of experience and superior knowledge in various specialized fields, such as business strategy, international strategy, finance, and personnel affairs.

In addition, the Company aims to ensure transparency and enhance corporate value by having individuals with many years of practical experience in corporate management, experts in corporate legal affairs and finance, and academic experts join the Board of Directors as outside directors and provide an outside perspective.

As for the size of the Board of Directors, we have achieved greater effectiveness and efficiency by functioning sufficiently as a business holding company while at the same time having some board members who also serve as directors of core Group companies.

The Company has appointed four women executive officers: two directors who are not members of Audit and Supervisory Committee, one director who is a member of Audit and Supervisory Committee and one executive officer.

The expertise and experience required of directors are shown in the “Skills Matrix for Directors.”

In accordance with the “Regulations of the Board of Directors,” the Board of Directors meets once a month and as needed, and held 22 meetings in FY 2022. The meetings of the Board of Directors deliberate on all matters to be discussed at the meetings of the Board of Directors in accordance with the Internal Regulations and actively exchange views on each matter, as well as receive quarterly reports on the status of the performance of duties by each director. To further improve its functioning, the Board of Directors is subject to an evaluation of its effectiveness.

Also, in light of the Corporate Governance Code, the “Nomination and Compensation Committee,” a voluntary advisory committee, was established under the Board of Directors to enhance the objectivity of nomination and compensation. The Committee met ten times during FY 2022.

Independent outside directors hold regular meetings with representative directors to strengthen the monitoring function for the execution of duties by directors.

In addition to inspecting significant approval documents, Audit and Supervisory Committee Members attend meetings of the Group Presidents’ Council, the Executive Committee and other key meetings. This involvement helps them to keep track of the company’s major decision-making processes and the progress of business execution. In addition, Audit and Supervisory Committee Members, CEO, Accounting Auditors, and others communicate with each other and exchange opinions to ensure that the audits of Audit and Supervisory Committee Members are conducted effectively.

The Company has established the Audit and Supervisory Committee Office with full-time staff to assist the Audit and Supervisory Committee in its duties, and three individuals have been assigned to this office.

At the Board of Directors meetings, we check the execution of duties by directors, including the state of compliance with laws and regulations, the state of risk management and information sharing, and the speed with which issues are resolved, and we also strive to ensure the effectiveness of the Board of Directors as a whole by holding meetings between representative directors and outside directors.

In addition, once a year, all directors are subject to a self-assessment of the effectiveness of the Board of Directors with the aim of improving the functioning of the Board of Directors as a whole and sharing awareness of the direction in which our corporate governance is headed.

More specifically, the self-assessment is conducted through an anonymous questionnaire to ensure that candid opinions are heard, and the questionnaire consists of major assessment items asking about the structure, operational status, responsibility and functions of the Board of Directors and the state of the Board of Directors as seen from outside directors. As for collecting responses, they are collected by an external law office with a duty of confidentiality, and they are analyzed by a third-party organization. Based on the results of this analysis, our Board of Directors has verified and evaluated the current situation and obtained favorable results, and continues to discuss issues related to the Board of Directors.

We provide an executive officers’ training program for directors to deepen their awareness of their roles and legal responsibilities on a regular basis. Beginning in FY 2023, the Company has established a systematic and regular series of executive seminars for directors and executive officers of the MIRAIT ONE Group. These seminars serve multiple purposes, including: (1) instilling and strengthening basic management skills appropriate for a prime market company; (2) providing opportunities to develop a comprehensive understanding of the market, technology and global trends including global conditions; and (3) aligning the direction of the directors and executives.

In addition, outside directors and other relevant persons are given the opportunity to visit business establishments and construction sites as appropriate, so that they can deepen their understanding of the Company’s business operations and current conditions.

We appropriately plan and develop successors for the CEO and other senior management based on our management philosophy and business strategies. When appointing a CEO, the Nomination and Compensation Committee, chaired by an independent outside director, is consulted, and based on its report, the Board of Directors votes on the appointment.

With regard to the compensation of directors (excluding the directors who are Audit and Supervisory Committee Members. The same applies below), the total amount (limit) is set by the General Meetings of Shareholders after approval by the Board of Directors, and each director receives compensation in accordance with their roles and responsibilities.

As well, with regard to the policy for deciding the compensation for each director, for the purpose of enhancing objectivity and transparency, the “Nomination and Compensation Committee” (chaired by an independent outside director), which is an advisory body to the Board of Directors and consists of four independent outside directors and the President and CEO, reports the results of its deliberations to the Board of Directors, which then makes decisions based on the report.

Outside directors, who are responsible for supervisory functions, are paid only monthly basic compensation in light of their duties.

* Details of compensation for executive officers are provided in the “Annual Securities Report.”

We have introduced the “Board Benefit Trust,” a performance-linked stock compensation system, for the purpose of clarifying the linkage between the compensation of executive officers and the Company’s business performance and stock value, and heightening awareness about contributions to the improvement in the business performance and corporate value over the medium to long term.

As for the indicators for performance-linked compensation, the Company has chosen the degree of achievement in areas such as the “consolidated operating income,” “ROE,” and “ESG indices.” These metrics were selected for their ease of understanding and are designed to raise awareness of one's contribution to improving the Group's consolidated performance and corporate value. A benchmark was established by allocating 30% of the monthly compensation for a period of three months in accordance with the “Internal regulations on issuing shares to executives.” Under the point system, the number of points is calculated by multiplying the performance-linked coefficient determined by the level of achievement of the Company's “consolidated operating income,” “ROE” and “ESG Indices.” Upon retirement, one share is granted for each point earned.

Also, in FY 2022, the Company introduced the “GHG reduction target” into the set of indexes for performance-linked compensation as a consolidated ESG index to raise awareness of ESG initiatives among management personnel.

* In consideration of insider trading regulations, etc., and in order to heighten management awareness and the common goal of increasing shareholder value, directors (excluding outside directors) are required to contribute at least 10% of their monthly compensation to the Executive Officers’ Stock Option Plan, which effectively changes the percentages: 72% for fixed compensation, 28% for variable compensation, and 14% for non-monetary compensation (stock-based compensation).

For FY 2022, it has been resolved that the decision on the amount of basic compensation for each director and the amount of bonuses based on the business performance of each fiscal year would be left to President and CEO NAKAYAMA Toshiki, on the understanding that the Nomination and Compensation Committee would be consulted within the range of the total amount approved at the General Meeting of Shareholders, based on the resolution of the Board of Directors on June 14, 2022. The reason for this delegation of authority is that the President and CEO is considered to be the most qualified person to evaluate the performance of each director's duties while having a bird’s eye view of the Company’s overall business.

This information is not provided because no executive officer received a total of 100 million yen or more in consolidated compensation, etc.

We require that competitive transactions and conflict-of-interest transactions conducted by directors be deliberated and approved by the Board of Directors, and that the status of such transactions be reported to the Board of Directors on a regular basis.

We require executive officers to submit a “Related Party Confirmation Statement” to ascertain whether there are any transactions with related parties, such as themselves, their close relatives, organizations they represent, and organizations in which they hold majority voting rights.

With regard to transactions with major shareholders, in accordance with internal regulations, the person with decision-making authority is required to confirm the appropriateness of such transactions to ensure that they do not harm the Company or the common interests of shareholders, and report particularly important transactions to the Board of Directors.

Our group classifies shares that it holds for the following purposes as investment shares for non-pure investment purposes, and shares that it holds for other purposes as investment shares for pure investment purposes.
A. Maintaining and strengthening business relationships with the investee company
B. Maintaining and strengthening cooperative relationships to promote alliance business
C. Cooperating for efficient construction, etc.

A. Holding policy
Our group holds shares of its business partners when it believes that holding such shares will enhance the Group’s corporate value and benefit its shareholders. After reviewing the purpose of holding shares and the status of transactions, etc., if the holding of such shares is deemed to be of little significance through quantitative and qualitative verification, we will gradually reduce the holdings through divestment, etc.
B. Methods of verifying the rationality of shareholding
We conduct quantitative and qualitative verifications of investment shares held for non-pure investment purposes in terms of medium- to long-term economic rationality and future prospects based on return and risk, etc.
C. Details of verification by the Board of Directors, etc. as to whether or not to hold individual issues
With regard to investment shares held by the Group for non-pure investment purposes, we conduct a review of the purpose of holding such shares, the status of transactions, etc., and determine whether or not to continue holding such shares by verifying each individual issue quantitatively and qualitatively once a year at a meeting of the Board of Directors, in terms of whether the returns and risks associated with the holdings are commensurate with the cost of capital, the purpose of the holdings, future business trends, etc.

The Company will divest shares that, after review, are determined to make little sense to hold, taking into consideration the share price and other factors. In addition, the Company will use the annual review to manage the status of holding and reduction of investment shares held throughout the entire Group for purposes other than investment. Based on the above policy, etc., the Company divested 4 issues in FY 2022.

Our company discloses accurate and timely information through TDnet and EDINET in accordance with the Disclosure Policy, which is published separately. We also actively use media such as our corporate website and press releases to further disseminate information. We also strive to provide beneficial information that is easy for shareholders and other investors to understand, such as the materials used in our IR activities.

In our dealings with all shareholders and other investors, we will fully and properly manage information in accordance with “Rules on insider trading regulations” when we are in possession of material information that has not yet been disclosed to the public.

The IR Department undertakes investor relations activities as the department in charge of investor relations under the supervision of the Director and Chief of Finance and Accounting Division, who is the manager responsible for the handling of information. The managers responsible for investor relations handle consultations with all of our shareholders and other investors as much as possible. The MIRAIT Group holds financial results briefings twice a year for analysts and institutional investors and distributes the briefings on its website, etc. In addition to providing important information in English in a timely manner to overseas institutional investors, we also engage in overseas IR activities in the North American, European and Asian regions. Our representatives also work to explain matters fully at these financial results briefings and in our overseas IR activities to encourage constructive dialogue with all of our shareholders and other investors.

In addition, in order to help people deepen their understanding of our business, we participate in online company information sessions streamed live for individual investors, as well as individual investor information sessions held by securities companies as appropriate. The opinions of shareholders and investors are provided as feedback to management at meetings of the Board of Directors and the Group Presidents’ Council. Furthermore, the Group also sends MIRAIT Report booklets that include business performance and topics to all of the shareholders twice a year.

* For details of dialogue with shareholders and investors, click here.

With regard to the conduct of general meetings of shareholders, we are making efforts to facilitate the understanding of shareholders by, for example, printing the convocation notice in color and incorporating video presentations into the delivery of business reports. The convocation notice, reference documents, and reports are also available on the Company’s website.

The notice for the 13th Annual General Meeting of Shareholders, scheduled for June 27, 2023, was sent on June 9, 2023, 18 days prior to the meeting (the legal date is June 12, 2023). On June 1, 2023, (26 days prior to the General Meeting of Shareholders), the Company initiated electronic delivery measures on the Tokyo Stock Exchange and the Company's website (the legal date was June 6). This was done to ensure that shareholders had sufficient time and access to information to exercise their voting rights. Should there be a need for additional information, it will be posted on the Company's website.

In order to deepen the understanding of shareholders and others who were unable to attend the meeting, the business report was posted in video format on the Company’s website in advance, and the meeting was streamed live on the day of the meeting. The video of the meeting is also made available after the meeting for shareholders who were unable to view the live stream.

The Group complies with the tax laws and regulations specific to each country and region in which it operates, as well as international taxation rules such as the BEPS* Action Plan. We are committed to maintaining and improving tax compliance and ensuring the payment of fair and due taxes.

* BEPS: Base Erosion and Profit Shifting