Corporate Governance

Basic Policy

In order to achieve sustainable growth and the continual increase of its corporate value, the Group strives to contribute to the creation of an abundant future for sei-katsu-sha, the growth of the economy, and the development of society as one of the world’s preeminent corporate groups that leads advances in marketing and innovation generation through the power of creativity. By doing so, the Group fulfills the trust and expectations of its various stakeholders.
For that purpose, the Company recognizes that one of its key management issues is enhancing the management and administration of the Group as a whole so that it realizes an environment that promotes independence and cooperation among the diverse operating companies under it and the cooperation of each company produces value greater than the sum of the parts. We will therefore endeavor to improve the Group’s management and administration and to strengthen and enhance the corporate governance of the Group.

Evolution of Corporate Governance System

* Hakuhodo, Daiko Advertising, YOMIKO ADVERTISING, and Hakuhodo DY Media Partners (scope later expanded to form Group Standing Audit & Supervisory Board Member Liaison Meeting)

Corporate Governance Framework of the Hakuhodo DY Group

As of June 29, 2022

Board of Directors

The Company’s Board of Directors, which consists of 10 directors, four of whom are outside directors, meets regularly (once a month, in principle) and whenever necessary. At these meetings, the Board of Directors makes decisions on important management-related matters, receives reports pertaining to the business performance of the Company and core operating companies, and audits the performance of duties of directors and corporate officers.

Director Nomination Policies

The Company aims to bring about positive change in the world and realize a society in which sei-katsu-sha can flourish and live active lifestyles of their choosing. To accomplish these goals, we create new value for sei-katsu-sha by harnessing the creativity of employees and the collective strength of teams in which individuals assert their creativity and respect that of others to further their mutual growth. This emphasis has led the Hakuhodo DY Group to become an organization boasting a level of diverse creative minds that is unprecedented on a global scale.
We take a similar approach toward the Board of Directors. With due consideration paid to the overall balance of insight, experience, and skills of directors, we seek to nominate internal directors that are highly knowledgeable about the Group’s operations along with multiple outside directors with extensive experience and wide-ranging insight. By assembling a unique and creative team on the Board of Directors, we look to ensure that the Board is able to contribute effectively to higher corporate value for the entire Group.

Director and Audit & Supervisory Board Member Skills Matrix

The backgrounds and areas of expertise of the Company’s directors and Audit & Supervisory Board members are indicated by 〇 in the following chart.

			Management	Finance	Human Resources	Corporate Governance	CSR	Digital	Global	Creation and Cultivation of Corporate Culture
	Name	Position	· Management of operating companies	· Finance · Accounting	· Human resources development · Diversity, equity, and inclusion	· Legal · Compliance	· Sustainability · SDGs	· Technology · Data / Systems	· International business	· Sei-katsu-sha Insight · Commitment to Partnership · Our people are our assets*
Directors	Hirokazu Toda	Director & Chairman	◯			◯			◯	◯
	Masayuki Mizushima	Representative Director & President	◯			◯			◯	◯
	Hirotake Yajima	Director & Executive Vice President	◯			◯		◯	◯	◯
	Masanori Nishioka	Representative Director & Senior Executive Corporate Officer		◯	◯	◯	◯			◯
	Akihiko Ebana	Director & Senior Executive Corporate Officer	◯				◯		◯	◯
	Motohiro Ando	Director & Senior Corporate Officer						◯		◯
	Noboru Matsuda	Outside Director				◯	◯			◯
	Nobumichi Hattori	Outside Director		◯		◯			◯	◯
	Toru Yamashita	Outside Director	◯		◯	◯	◯	◯	◯	◯
	Ikuko Arimatsu	Outside Director			◯	◯	◯			◯
Auditors	Osamu Nishimura	Full-time Audit & Supervisory Board Member			◯	◯				◯
	Tomoyuki Imaizumi	Full-time Audit & Supervisory Board Member			◯	◯				◯
	Katsuyuki Yamaguchi	Outside Audit & Supervisory Board Member				◯			◯	◯
	Kazuhiko Tomoda	Outside Audit & Supervisory Board Member		◯		◯				◯
	Shin Kikuchi	Outside Audit & Supervisory Board Member				◯			◯	◯

Note: This chart does not reflect all of the skills of the Company’s directors and Audit & Supervisory Board members.

* Under this policy, we regard our employees as extremely valuable stakeholders. The minds of our employees are what allow us to produce ideas. For this reason, we place importance on employee satisfaction and are making particular efforts to respect individuality, develop personal creativity, and enhance our teamwork capabilities. These efforts ultimately help us improve our level of customer satisfaction.

Attendance at Board of Directors Meetings (Fiscal 2021)

Position	Name	Attendance
Director & Chairman	Hirokazu Toda	20/20 (100.0%)
Representative Director & President	Masayuki Mizushima	20/20 (100.0%)
Director & Executive Vice President	Hirotake Yajima	20/20 (100.0%)
Representative Director & Senior Executive Corporate Officer	Masanori Nishioka	20/20 (100.0%)
Director & Senior Executive Corporate Officer	Akihiko Ebana	20/20 (100.0%)
Director & Senior Corporate Officer	Motohiro Ando	Appointed in June 2022
Outside Director	Noboru Matsuda	20/20 (100.0%)
Outside Director	Nobumichi Hattori	20/20 (100.0%)
Outside Director	Toru Yamashita	19/20 (95.0%)
Outside Director	Ikuko Arimatsu	Appointed in June 2022

Evaluation of Effectiveness of Board of Directors

In order to analyze and evaluate the effectiveness of the Company’s Board of Directors during fiscal 2021, a survey about its performance was distributed to all directors and Audit & Supervisory Board members in February 2022. Outside consultants compiled the responses to the survey from an objective standpoint. The Board of Directors then used these results to analyze and evaluate its effectiveness.

< Survey Themes >

①The role and function of the Board of Directors
②The composition and size of the Board of Directors
③ The operation of the Board of Directors
④ Liaison with audit functions

⑤Communication with management
⑥Relationship with shareholders and investors
⑦Summary and free-text items

Evaluation

It was confirmed that the composition, operation, and discussion content of the Board of Directors is mostly appropriate; that the Board of Directors engages in necessary and sufficient discussions, such as by sharing a vision for what the Board of Directors should be as the board of a holding company; that it engages in appropriate monitoring; and that the Board as a whole, including outside directors, has a diverse range of skills, expertise, and backgrounds. Based on these factors, it was determined that the frameworks are in place to ensure appropriate decision-making through vigorous discussion and that these frameworks represent a strength.

Areas Requiring Improvement Identified in Fiscal 2021:
Evaluation and Improvement Measures

Based on the results of the fiscal 2021 evaluation survey and analysis, two areas requiring improvement (indicated in the table below) were identified. The Company plans to implement improvement measures in these areas.

Major Areas Requiring Improvement	Major Improvement Measures
Provide opportunities to promote understanding of the Group among outside directors and outside Audit & Supervisory Board members	Explored the possibility of providing and took measures to provide outside directors and outside Audit & Supervisory Board members with opportunities to visit the Group’s operating companies and observe and participate in internal measures in order to deepen their understanding of the Group’s businesses and issues
Invigorate discussions at the Board of Directors meetings and enhance the quality of discussions in relation to medium- and long-term issues	Facilitated briefings to explain the key points to be raised by speakers to ensure sufficient time for discussions on agenda items and medium- to long-term issues. Enhanced opportunities for discussions and reports on medium- to long-term issues with the support of relevant departments. Continued to strive to ensure that materials are provided as far in advance of meetings as possible.

In addition, the Company recognizes that taking advantage of the Nomination Committee to ensure adequate discussions on succession plans and ensuring a more diverse Board of Directors are issues that must be addressed over the medium term to further enhance the effectiveness of the Board of Directors.
Moreover, in the fiscal 2020 evaluation, ensuring diversity on the Board of Directors was cited as an issue that must continue to be addressed going forward. In reflection of this finding, the Company appointed a female outside director at the General Meeting of Shareholders held in June 2022.

(Reference) Areas Requiring Improvement Identified in Fiscal 2020 Evaluation and Improvement Measures

Based on the results of the fiscal 2020 evaluation survey and analysis, three areas requiring improvement (indicated in the table below) were identified. Improvements were generally achieved, as was reflected in higher evaluations in the fiscal 2021 survey. Nevertheless, initiatives to improve these areas will be continued in pursuit of increased effectiveness going forward as responses were received citing a need to further improve in these areas.

Major Areas Requiring Improvement	Major Improvement Measures
Reports to the Board of Directors regarding future compliance provisions in internal control system	Appropriately timed reports to the Board of Directors regarding processes and concrete measures
Ongoing provision of feedback to the Board of Directors regarding discussions by the Nomination Committee and the Remuneration Committee	Continuation of measures for sharing information on committee processes and discussion details from fiscal 2020 and promotion of further understanding
Sharing of information with outside directors and outside Audit & Supervisory Board members	Increased information provision through forums for pre-meeting explanation of proposals and agenda items and through meetings between outside directors and outside Audit & Supervisory Board members

The Board of Directors will continue to pursue ongoing improvements to its effectiveness based on the evaluation results.

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