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Evaluation of the Effectiveness of the Board of Directors

At J. Front Retailing we believe it is of utmost importance to ensure the effectiveness of the Board of Directors in order to achieve sustainable growth for the Group and improve our corporate value in the medium and long term. And to ascertain whether we are achieving adequate effectiveness, we conduct a third-party evaluation of the effectiveness of the Board of Directors every year since 2015.

Evaluation Methodology

The method used was based on a questionnaire distributed beforehand, after which “individual interviews” (Note) conducted by the third-party organization, the results of which were collated and analyzed in the form of a report, which was then deliberated by the Board of Directors.

(Note) “Individual interviews”
Based on the results of the questionnaire, individual hour-long interviews were conducted by the third-party organization in which all Directors (both Internal and Outside) were inquired about their views and awareness of issues in response to various questions concerning the Board of Directors. The results of the interviews are leading to the solving of issues at the Board of Directors.

Evaluation Items

40 items including:
●The Board of Directors’ contribution to the entire Group;
●The Board of Directors’ composition;
●Its operational status;
●The content of deliberations; and
●The effectiveness of activities of the Nomination, Remuneration and Audit Committees

Evaluation Results, Improvement Measures, Approaches to Issues, etc.

In the previous eight occasions of evaluation, the results clarified issues to be addressed such as strengthening discussions of important proposals and reviewing the composition of the Board of Directors. Improvement initiatives are strengthening the oversight function through our efforts such as increase in the ratio of Outside Directors, reinforcement of agenda setting, and enhancement of deliberations.

In the ninth evaluation of the effectiveness of the Board of Directors, conducted between August and September 2023, it was reported by the third-party organization that the Board of Directors of the Company had improved its effectiveness through means that include transitioning to a company with three committees (nomination, audit, and remuneration), establishing an advanced governance structure with a majority of independent Outside Directors, etc., and strengthening the functions of the three statutory committees. Although the formal establishment of these systems is almost complete, from the perspective of improving corporate value over the medium to long term, “monitoring of the Medium-term Business Plan” and “thorough preparation and analysis for discussion of growth strategies” were identified as substantive issues to be addressed. In response to these issues, we will continue to share issues based on the evaluation of the effectiveness of the Board of Directors to enhance the substantive effectiveness of the Board of Directors.

Corporate Governance