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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

A third-party organization conducts individual interviews (Note) with all Directors (both Inside and Outside) based on a questionnaire distributed beforehand and their results are collated and analyzed in the form of a report, which is 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 Inside 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 six 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 seventh evaluation of the effectiveness of the Board of Directors, conducted between September and October 2021, it was reported by the third-party organization that under the current composition of the Board of Directors, its deliberations have become more objective, and that lively discussions take place from multiple perspectives. The following issues with the Board of Directors were also recognized.
●Clarification of the roles of the holding company and its Board of Directors;
●Concentration on strategic important proposals and discussions at the Board of Directors meetings;
●Review of the composition of the Board of Directors; and
●Further strengthening of the functions of the Board of Directors Secretariat

In response to these issues, the following initiatives will be implemented to improve the effectiveness of the Board of Directors
・We will articulate the holding company’s roles in the FY2022 Group Management Policy and strengthen the function of planning to facilitate strategy implementation.
・A majority of members of the Board of Directors shall be independent Outside Directors to ensure even greater effectiveness with respect to its discussions.
・The holding company’s Board of Directors strengthens the monitoring function for the progress of the Medium-term Business Plan and PMI;
・The Board of Directors Secretariat strives to strengthen communication with the management team and to set proposals based on management issues more than ever; and
・The Board of Directors Secretariat does follow-ups so that executive members can sufficiently enhance consideration of and response to challenges presented at the Board of Directors meetings.

Corporate Governance