Assessment of Board Effectiveness

We recognize the challenges to the responsibilities, composition, and operation of the Board of Directors and are committed to continuous improvement, with the aim of realizing sustainable corporate value enhancement. The Board of Directors conducts an annual analysis and evaluation of the effectiveness of the Board of Directors based on each director's self-evaluation and other factors.

The Board of Directors pointed out that it was difficult to clarify issues due to the focus on quantitative evaluation, so from the fiscal year ending June 30, 2020 onward, we focused on our own surveys and conducted interviews with directors and auditors using a third party organization as appropriate. The Board of Directors pointed out that the quantitative evaluation was mainly conducted in the fiscal year ending June 30, 2019, and that it was difficult to clarify issues.

 

In order to identify issues more clearly after June 2021, we have created and implemented our own questionnaire to allow participants to evaluate issues and provide opinions on how to respond to them. The survey was administered to all directors, including audit committee members, in June 2024, and the results were reported to the Board of Directors on July 19, 2024.

In summary, as in the previous year, the majority of respondents believed the monitoring function has been enhanced by the transition to a company with an Audit Committee System, and that the Board of Directors is operating efficiently thanks to support from the use of the company's own DX Cloud product that can support a Board of Directors (TRINITY BOARD). In general, the effectiveness of the Board of Directors was highly rated, and the Board of Directors was evaluated operating appropriately. On the other hand, we recognize that the main issues are as follows.

As for the organization of the Board of Directors, the following opinions and issues were noted.

 

• The establishment of a nominating committee is not necessary, but the group CEO and other members of the management team should discuss group CEO succession.
• A need for people with knowledge of software technology and M&A.
• Opportunities for each director to gain skills necessary to fulfill his or her responsibilities as a director are left to the individual director, but basic skills need to be shared and learned.

Issues were identified that need to be discussed further as priority items with regards succession for the Group CEO and other management team on the executive side.

The previous suggestion that advance distribution of items for discussion at meetings and related explanations were inadequate was improved through the use of TRINITY BOARD, the Board of Directors' DX Cloud platform. In order to provide opportunities to better understand the strategies and realities of the operating companies, off-site meetings were held to promote understanding of their businesses, as in the previous year.