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Nomination/Appointment/Succession Planning

Desirable Qualities Required of the Group Managerial Talent

The Company believes the persons who assume the management of the Group should have the qualities described below in accordance with the Basic Mission Statement and the Group Vision.
(i) Strategic mindset
The persons need to forge strategies from a medium- to long-term perspective and contemplate their own forward-looking and innovative solutions geared toward achieving goals through a process that involves proactively analyzing changes in markets and customers and taking a multifaceted approach in using such findings to gain insights into the essential challenges at hand.
(ii) Reform-oriented leadership
The persons need to pursue new initiatives underpinned by a desire to take on challenges without becoming caught up with precedent or past experiences. Furthermore, they need to foment a healthy sense of urgency within the organization without any fear of risk while promoting a transformative course of action.
(iii) Tenacity to achieve results
The persons need to have a sense of mission and a desire to take on challenges with respect to achieving lofty goals, thereby holding course until goals are achieved and persevering until efforts lead to results.
(iv) Organization development strengths
The persons need to generate results through efforts that involve making the utmost of the organization’s inherent energy and initiative by instilling their team members with the Vision and strategies for achieving the organization’s objectives and spurring the organization’s various elements (including its business operations, mechanisms, corporate culture and human resources).
(v) Human resource development strengths
The persons need to maximize the growth potential of their team members by taking a series of approaches that involve assigning challenges to team members, retrospectively evaluating their results and drafting training plans, all on the basis of a career development mindset premised on the notion that “individuals achieve growth through the work that they pursue.”

【Discernible capabilities required of the Company’s President and Representative Executive Officer】

1. Capacity to conceive a business vision
・The ability to break free of preconceived ideas, look ahead, and present a vision for the creation of new value in the future
・The ability to present logical, convincing strategies for the organization that will give it a competitive edge
2. Capacity to communicate a vision
・The ability to instill a vision throughout the organization and influence the organization’s members
・The ability to form an organization comprising a diverse range of members and take the lead in driving that organization
・The ability to unite different cultures within one organization and enable mutual enhancement among cultures through the adoption of each other’s merits
3. Persistence and capacity to achieve results
・The ability to use every means to execute plans tenaciously and ensure that results are always achieved
4. Moral character and charisma
・A selfless ethos that enables consideration of all stakeholders’ interests and the embodiment of the corporate credo
・Unimpeachable personal integrity

Nomination and Appointment Policy

Outside Directors

We appoint individuals who are expected to furnish advice and perform the oversight function on the Board of Directors by drawing on points of view and perspectives that vary from those of Inside Directors. Accordingly, such individuals must be able to fulfill the duty of care of a prudent manager and the duty of loyalty required by the Companies Act of Japan; they must offer a sense of pragmatism along with a high-level overview and sweeping perspective of business based on abundant experience as corporate managers; and they must have careers outside the retail industry or have a global managerial background or extensive expertise in finance, accounting, legal affairs etc.

Inside Directors who do not execute business

We appoint individuals who are well informed about internal information based on their extensive experience in the respective business of the Group, and who are expected to effectively ensure objective management oversight. Accordingly, such individuals must be able to fulfill the duty of care of a prudent manager and the duty of loyalty required by the Companies Act of Japan.
The Chairperson of Board of Directors, with the aim of further enhancing the oversight function while ensuring the smooth operation of the Board of Directors, and the full-time members of the Audit Committee, with the aim of maintaining and improving audit accuracy, are respectively appointed from among Directors who do not execute business.

Executive Officers

We appoint individuals who are expected to steadily and swiftly carry out business execution on the basis of corporate management policy as determined by the Board of Directors. Accordingly, such individuals must be able to fulfill the duty of care of a prudent manager and the duty of loyalty required by the Companies Act of Japan; they must have extensive experience in the respective businesses of the Group; and they must have a profound understanding of the Group’s operating environment (including its challenges).
The Company appoints a number of Executive Officers with specific titles in addition to the Representative Executive Officers. These individuals are to provide control, direction and oversight of business executed by the Executive Officers, acting as persons responsible for making final decisions pertaining to business execution.

Nomination and Appointment Procedures and Disclosure

Matters involving human resources with respect to the Directors and Executive Officers of the Company are carried out on the basis of the aforementioned policy for nominations and appointments, and such decisions are made in accordance with the results of managerial talent evaluations performed by a third-party organization.
Moreover, to ensure transparency and objectivity in the decision-making process, the Nomination Committee, which is comprised of three independent Outside Directors and the chairperson of Board of Directors, who is a non-executive Director from inside the Company, deliberates on such matters and makes decisions in that regard and then reports such details in response to the request of the Board of Directors.
In our convocation notices of shareholders meetings, we disclose our rationale for appointing candidates for the position of Director and the status of officers from other listed companies who are concurrently serving in those positions.

Notice of Convocation

Criteria for Determining Independence of Outside Directors

In appointing the Company’s Outside Directors, we select individuals who maintain a high degree of independence and consequently are not susceptible to conflicts of interest involving the Company’s shareholders. An individual does not meet the criteria for independence if one or more of the items listed below apply to that individual.
(i) Person who executes business in the Group
(ii) Major shareholder of the Company (including a person who executes business thereof; the same applies with items (iii) to (vi), below)
(iii) Major business partner of the Group
(iv) Person affiliated with a law office, audit firm, consultancy or other entity that receives payment other than executive compensation of more than a certain amount from the Group
(v) Recipient of donations of more than a certain amount contributed by the Group
(vi) Related party in cases where the party is engaged in an arrangement involving a reciprocal officer appointment with the Group
(vii) Person with respect to whom any of items (i) to (vi) above has applied at any point over the last five years
(viii) Spouse or relative within the second degree of consanguinity of a person with respect to whom any of the items (i) to (vii) above applies
With respect to the above, a “person who executes business” refers to an executive Director, an Executive Officer, and other employees; “major shareholder” refers to a shareholder who holds voting rights accounting for no less than 10% of the Company’s voting rights; “major business partner” refers to a business partner whose transactions with the Group account for 2% or more of the Company’s annual consolidated net sales or the business partner’s annual net sales for any of the fiscal years over the last five years; “a certain amount” refers to an annual amount of 10 million yen in any of the fiscal years over the last five years.
The Company has registered all six Outside Directors as independent officers as stipulated by the financial instruments exchanges.

Executive Sessions

Only Outside Directors meet to freely exchange opinions and share information. (The lead director is Ms. SATO Rieko.) At the request of the lead director, the President and Representative Executive Officer and the chairperson of the Board of Directors may also participate in discussions.

Ensuring Diversity

At J. Front Retailing we believe that workforce diversity is the true source of corporate competitive advantage. When a diversity of views is expressed, different elements come together to create new value, which is vital to us. We are aiming to become a company which respects and tolerates diversity by positioning the "promotion of diversity & inclusion" as one of our priority materiality issues for the realization of sustainable corporate growth and a sustainable society, setting medium- and long-term targets, and implementing specific efforts.
Based on this, we ensure the diversity of director candidates in gender and other aspects during the nomination process by considering the balance of knowledge, experience, and abilities of the Board of Directors as a whole and disclose combination of skills, etc. possessed by Directors (skill matrix).
Currently, three of the Company's ten Directors are women, two of whom are independent Outside Directors.

Training

The Company continuously provides opportunities to the Directors and Executive Officers of the Company and the Directors, Audit & Supervisory Board Members and Executive Officers of the main operating companies, to acquire and update the knowledge, etc. that they need to fulfill their roles and responsibilities with respect to oversight, auditing, business execution and other tasks.

Inside Directors and Executive Officers of the Company and Directors, Audit & Supervisory Board Members and Executive Officers of the Main Operating Companies

The Company also provides with useful information, etc. about corporate governance, compliance, and the Group management. Furthermore, based on the results of the evaluation on managerial talent by a third-party organization, the Company sets and conducts training plans such as coaching which leads to the achievement of the results expected of each individual.

Candidates for Management Positions, Including Executive Officers

The Company operates the “JFR Business Management School” whose principalis the President and Representative Executive Officer to help the top management share awareness of problems and enhance ingenuity in carrying out the Medium-term Business Plan. External consultants deliver lectures and the Company lets the attendees consider what the Group should be 10 years from now from the managers' viewpoints based on its Medium-term Business Plan and in anticipation of what lies beyond it and also lets them make presentations directly to the President and Representative Executive Officer. These presentations are subject to evaluation. The President and Representative Executive Officer attends all day long every time it is held. In addition, the Company lets them prepare new business plans, etc., to prevent them from being only engaged in classroom learning.

Outside Directors

We provide briefings, when Outside Directors are appointed as well as on a continuous and regular basis, giving the details of the Basic Mission Statement, the Group Vision, the Group Medium-term Business Plan and the Group Annual Management Policy, as well as the Group operations, performance, financial standing and operational status.

Succession Planning

J. Front Retailing regards the selection of the President and Representative Executive Officer as the most important strategic decision making, and accordingly potisions the drawing up and implementation of plans regarding successors as matters of particular importance in terms of management strategy.

Selection of Successor Candidates

The Company ensures clarity, transparency and objectivity in the process of selecting successor candidates through repeated deliberations conducted by the Nomination Committee, which consists of three independent Outside Directors and the Chairperson of Board of Directors, who is a non-executive Director from inside the Company.
The Board of Directors focuses on realizing the Basic Mission Statement and the Group Vision, selects the President and Representative Executive Officer, and plays a supervisory role based on proposals received from the Nomination Committee.

Removal of the President and Representative Executive Officer

The Board of Directors discusses and decides on the proposals discussed and decided on by the Nomination Committee in view of factors such as the status of performance of duties achieved by successor candidates selected under the succession plan adopted by the Nomination Committee has achieved results, etc., in addition to set targets, anticipated results, and the results of efforts (e.g., performance for each financial period, the status of the implementation of strategies, etc.).

Corporate Governance