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.
From the perspective of enhancing the independence and objectivity of analysis and evaluation, third-party evaluations have been conducted for the fiscal years ending June 30, 2018 and June 30, 2019. However, the Board of Directors pointed out that it was difficult to clarify issues due to the focus on quantitative evaluation, and we have decided to conduct interviews with directors and corporate auditors by a third-party organization as appropriate, mainly through our own questionnaire survey from the fiscal year ending June 30, 2020 onward.
In order to understand the issues more clearly after June 2021, we have created and implemented our own questionnaire form to enable the participants to evaluate the issues and describe their opinions on how to respond to them. The survey was administered to all directors and auditors in July 2022, and the report was presented to the Board of Directors on August 5, 2022.
Summarizing the survey responses, the effectiveness of the Board of Directors was generally highly rated and evaluated as being properly operated. On the other hand, some have pointed out that the discussion of various issues that were previously recognized as challenges has not progressed, and that more time should be spent on broader issues such as management strategy and medium-term management plans.
As for the organization of the Board of Directors, the following opinions and issues were noted
- Establishment of a nominating committee is not necessary, and the board of directors should thoroughly discuss the nomination process and fulfill its oversight responsibilities.
- Diversity of each director and expected roles need to be clarified.
- The system under which monitoring functions should be organized with a view to Avant's current and future vision.
While it was recognized that progress has been made in discussions on the Corporate Officer personnel and executive compensation systems, it was pointed out that there has been no progress in discussions on the issues that had been pointed out as requiring continued discussion (Succession Plan, criteria for appointment and dismissal of directors). It was also noted that capital policy and investor feedback need to be actively discussed.
More problems than ever were identified with the reporting system. An increasing number of participants pointed out that the points of resolution and report items were unclear and that they were not distributed or explained sufficiently in advance. It was also pointed out that periodic reporting projects, etc., should be simplified by focusing on key points, while at the same time providing opportunities to gain a deeper understanding of the strategies and actual conditions of operating companies.
In light of the above remarks, we report that we will push for the following actions in the operation of the Board of Directors for the fiscal year ending June 30, 2023.
- Discussions are held throughout the year and matters requiring reporting are discussed in the supervisory and executive
- The materials should be accompanied by an executive summary, so that the principles can be explained by it.
- Streamline discussion time by distributing materials a week in advance, or by explaining in advance.
- Off-site and business briefings should ne held regularly.