Corporate Governance 1

ValuesBoard of Directors
Independent Outside Directors
Michio Masukawa

Naoki Uno

President and COO
Representative Director andPresident, DCM Co., Ltd.

Director
External Director, The Yamanashi
Chuo Bank, Ltd.

Director
External Director, TerraSky Co., Ltd.

Audit and Supervisory Committee Member

Chairman of Audit and Supervisory Committee Member

Nominating Committee Member

Nominating Committee Member

Chairman of Nominating Committee Member

Nominating Committee Member

Compensation Committee Member

Compensation Committee Member

Chairman of Compensation Committee Member

Compensation Committee Member

Hikaru Oguchi

Hitomi Iba

Director, Executive Officer
Director and Vice President,
Executive Manager of Business
Operating Headquarters,
DCM Co., Ltd.
Representative Director andPresident, Hodaka Co., Ltd.

Director, Executive Officer,
in charge of Internal Control,
General Affairs and Stocks
Director and Vice President,
Executive Manager of
Administration Headquarters,
DCM Co., Ltd.
Representative Director andPresident, XPRICE Inc.
Director, Keiyo Co., Ltd.

Director
Partner, Nishimura & Asahi

Director
Representative Director andPresident, IBA Company Co., Ltd.

Director
Representative Director andPresident, CEO, Daiki Axis Co., Ltd.

Koji Jitsukawa

Hisato Kumagai

Director
Representative Director andPresident, Keiyo Co., Ltd.

Director
Audit and Supervisory Committee
Member, DCM Co., Ltd.

Standing Audit and Supervisory Committee Member

DCM Holdings Co., Ltd. Integrated Report 2023

Nominating Committee Member
Audit and Supervisory Committee Member

Compensation Committee Member

Knowledge, experience, and skills held by Directors of the Company (Skill Matrix)
Name

Post

Toshihiro Hisada

Chairman and
Representative Director, CEO

Yasunori Ishiguro

Representative Director andPresident, COO

Keizo Honda

Director, Executive Officer

Toshimitsu Shimizu

Director, Executive Officer

Masayuki Nakagawa

Director, Executive Officer

Hiroshi Ogame

Director

Koji Jitsukawa

Director

Hisato Kumagai

Director (Standing Audit andSupervisory Committee Member)Michio Masukawa

Outside,Director (Audit and Supervisory
Independent Committee Member)

Naoki Uno

Outside,Director (Audit and Supervisory
Independent Committee Member)

Hikaru Oguchi

Outside,Director (Audit and Supervisory
Independent Committee Member)

Hitomi Iba

Outside,Director (Audit and Supervisory
Independent Committee Member)

GeneralFinance and Legal andHR and Talent Sales andIT and DX
International
Management Accounting Compliance
Development Marketing

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ESG

Financial Highlights

Hiroshi Ogame

Director, Executive Officer, incharge of Corporate Strategy andPublic Relations
Director, Managing Executive Officer
and General Manager, Corporate
Strategy Office, DCM Co., Ltd.
Director, XPRICE Inc.

Audit and Supervisory Committee Member

Risk Management and Compliance

Masayuki Nakagawa

Corporate GovernanceToshimitsu Shimizu

Sustainability

Keizo Honda

Medium-Term Management Plan

Yasunori Ishiguro

Chairman and CEO

Message from the President

Toshihiro Hisada

Chairman of the Board

42

Business Model

Directors

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43

Corporate Governance 2

ValuesCorporate GovernanceBusiness Model

Role of the Audit and Supervisory Committee

In order to continue to be supported as a "valuable company" by all of our stakeholders, which include customers, business
partners, shareholders, employees, and local communities, as a holding company that supervises and manages the operatingcompanies within the Group, we believe that our mission is to enhance corporate and shareholder value, and that the foundation
for realizing this mission is to strengthen corporate governance. To this end, we will work to revitalize the Board of Directors,
strengthen the auditing system, increase the efficiency of the management structure, and improve the compliance system.

The Company's Audit and Supervisory Committee consists of five members, four of whom are independent external directors.
To ensure the effectiveness of its activities, the Company has appointed a standing Audit and Supervisory Committee member.
The Audit and Supervisory Committee is chaired by an independent external director and conducts audits in accordance withestablished audit policies and plans through the use of internal control systems and close coordination with accounting auditors.
The standing Audit and Supervisory Committee member holds regular meetings with the Internal Audit Office in charge ofauditing operations and financial reporting and receives reports and exchanges opinions on the status of audits and exchange
opinions.

Message from the President

Basic approach

Reasons for adoption of corporate governance system

Corporate GovernanceTo clarify the responsibility for Group management and execution, strengthen the governance system, and build an execution
system that can flexibly respond to changes in the business environment, we select two representative directors as the Chief
Executive Officer (CEO) and Chief Operating Officer (COO). We believe it is appropriate that the Chairman and CEO serves as
Chairman of the Board of Directors to facilitate and summarize discussions on resolutions at the Board of Directors meetings,
which are proposed mainly by the President and COO to promote discussions from a broad range of perspectives.

The Nominating Committee and Compensation Committee were established as advisory bodies to the Board of Directors.
The Nominating Committee deliberates and reports to the Board of Directors policy decisions on the selection of directors andexecutive officers and proposals for the appointment and dismissal of directors, executive directors, and executive officers.
The Compensation Committee reports to the Board of Directors and makes proposals to the Audit and Supervisory Committee
regarding compensation policies and compensation for directors and executive officers.
From the perspective of ensuring independence, Nominating Committee and Compensation Committee members areappointed by Board of Director resolution, chaired by independent external directors, and comprise a majority of independent
external directors as members.
Although these committees are voluntary, the chairmen of both the Nominating Committee and Compensation Committee
report their decisions to the Board of Directors, which has a significant impact on Board of Director decision-making.

Sustainability

Approach regarding the Chairman of the Board of Directors

Role of the Nominating Committee and Compensation Committee

Medium-Term Management Plan

We have adopted an Audit and Supervisory Committee system based on our determination that an auditing and supervisionsystem implemented by an Audit and Supervisory Committee is effective as a management supervision function. We believe thatby establishing an Audit and Supervisory Committee with organizational auditing authority, we can strengthen the managementmonitoring function and continuously enhance corporate value.
Since DCM’s founding, the Nominating Committee and Compensation Committee, both of which are chaired by independent
external directors, have served as advisory bodies to the Board of Directors. All committees, including the Audit and Supervisory
Committee, are chaired by independent external directors, and a majority of the members are independent external directors,
thereby enhancing the effectiveness of governance.

External Director-only meetings and meetings between External Directors and the President
Opportunities for the four external directors to exchange opinions amongst themselves and exchanges between the President
and the Audit and Supervisory Committee Members (comprising four external directors and one standing Audit and Supervisory
Committee member) are provided on a regular basis and held separately from Board of Director meetings, with opinions fromexternal directors used to improve the effectiveness of the Board of Directors.

Evaluating Board of Director effectiveness

General Meeting of Shareholders

Works with
Dismisses
Agenda items

Appoints/Dismisses

Audit and
Board of Directors
Audit and Supervisory
Supervisory
7 directors
Committee Committee, etc. 5 members

Consults

Nominating Committee
Reports Compensation Committee(4 external)

Audit
Reports

Works with

Gives
Instructions
toAdviceAudit

We evaluate the effectiveness of the Board of Directors

As a result of this evaluation process, we havewith the aim of enhancing corporate value, verifying that

confirmed that, at present, the Board of Directors is

the Board of Directors is fulfilling its responsibilities andadequately fulfilling its supervisory function, has anroles, and identifying and continually improving issues

appropriate composition, and engages in discussions

within the Board of Directors.

using the requisite materials and indicators. Evaluation

In fiscal 2022, the Board of Directors shared andAudit/
Oversees

Internal Control
Committee
Lawyers

Appoints/Dismisses

Reports
Works with

Reports/
Discusses

Appoints/Dismisses/Oversees

Representative Director

Works with

Reports

Sustainability Committee

Works with

Internal Control

Management Strategy / PR

Internal audits

Finance and IR

Disclosure Committee

Financial Highlights

Independent auditor

Appoints/Dismisses

Risk Management and Compliance

Schematic diagram

items include confirmation of “the content and number

discussed responses from all Board members (excludingof proposals submitted to the Board of Directors,”

the chairman), including the four external directors,“the provision of information necessary for making

regarding evaluation items focused on the composition

management decisions,” and “the reporting ofof the Board of Directors, the creation of an environment

appropriate indicators based on medium- and long-term

that stimulates discussions and management decision-

strategies.” Going forward, we will continue conducting

making, monitoring based on medium- to long-term

periodic evaluations to further improve the effectivenessstrategies, and the status of internal controls monitoring.

of the Board of Directors.

General Affairs/Stocks

Operating companies

44

DCM Holdings Co., Ltd. Integrated Report 2023

45

Corporate Governance 3

Director, Audit andSupervisory Committee
Member (External)

Four external directors, each of whom possesses a variety of experiences and expertise and are involved in DCM
management decision-making and the oversight of business execution, discuss the operation of the Board of
Directors and the challenges it faces in creating further corporate value.

Uno: I have been involved in a wide range ofmanagement roles at a major insurance group, mainly46

DCM Holdings Co., Ltd. Integrated Report 2023

in the IT department, but also in sales planning andcorporate planning. For this reason, I believe that I cancontribute to DCM first and foremost in theestablishment of business processes utilizing IT. I havealso been involved in the integration of information
systems and business processes as the person in chargeof corporate mergers.
I am able to advise how to be careful when
integrating two companies into one under the DCM
growth strategy. Additionally, as an external directorof an IT company that develops systems on quantum
computers, I can offer opinions based on my knowledgeof cutting-edge areas as well as IT implementationand operations.
Oguchi: As a lawyer, I have been involved in thebusiness development of Japanese companies froma legal perspective for over 20 years in various industries,
mainly in Asia. Since DCM does business in various

Financial Highlights

Masukawa: Since my appointment as an external
director, DCM has continued to expand throughmanagement integration and M&A strategies. In thiscontext, I believe that my experience in regional bankrevitalization during my time at the Bank of Japan
enables me to make recommendations based on
the feelings of employees when their organization
undergoes a change. The Bank of Japan is also a thinktank that conducts economic research and various
surveys and analyses, so I have knowledge of marketingand sales gained through relationships with a wide
range of companies. Further, I currently serve as
an auditor for an industry organization related to
information systems in the financial sector, so I also
convey the importance of adhering to establishedstandards and rules.

Iba: Although I was recently appointed in May 2022,
my impression is that the Board of Directors is “openand free in its discussions,” with “each member willingto listen to and consider different points of view ina positive manner.” I am able to express in my own
words what I think is important for DCM's growth. In
addition to Board meetings, I am welcome to participate
in Management Council and other meetings as well as
discussions on new products in the upcoming fiscal year,
which enable me to hear firsthand the arguments andfactual debates behind various strategies and deepen
my understanding of DCM management.

Iba: I think the “store strategy centered on enhancing
existing stores” and “creation of a unique ‘BOPIS’ style”
stated in the medium-term management plan are thecorrect strategies from both domestic and global
perspectives. Looking at sales changes by channel in the
US and Europe, the growth of the e-commerce channel
is plateauing, and past predictions that physical stores
would become less important as the shift to e-commerce
progresses do not appear to be coming true. My sense isthat DCM is paying attention to important trends thatwill occur in the future, and on that basis, carefully
considers how to grow the Company, then creates
medium-term management plans.

Risk Management and Compliance

Board of Directors Atmosphere

Evaluation of the medium- to long-term
growth strategy

Corporate GovernanceDirector, Audit andSupervisory Committee
Member (External)

Naoki Uno

Uno: I have attended a wide variety of board meetings,
from major insurance groups to venture companies, butrarely have I seen a situation where an external director
recommendation caused a company to reconsider thedetails or direction of an agenda item. However, when
we advise DCM against a course of action, theysometimes decide to reconsider without opposition toexternal director opinions or rigid adherence to theconclusions arrived at during internal discussions. This isa very positive corporate culture, and I think it should bemaintained going forward.

Sustainability

Director, Audit andSupervisory Committee
Member (External)

Hitomi Iba

Iba: After earning a graduate degree in business, I gained
experience working at the US headquarters of several
companies with a strong consumer marketing focus.
I believe that my experience in launching new businesses
and developing products and services for consumers
facilitates a “fourfold perspective” that is difficult for
DCM to possess internally.
First, is the “customer’s perspective,” which is whatcustomers think. Second, is the “manufacturer’s
perspective,” which is what DCM business partners andothers expect from distribution. Third, is the “future
potential perspective,” which refers to overseas
developments in Asia, the US, and Europe. Fourth, is the“organizational and human resource utilization
perspective,” which based on my management
experience at the headquarters of a global company,
involves the efforts I want to make in supporting
management.

Medium-Term Management Plan

Director, Audit andSupervisory Committee
Member (External)

Hikaru Oguchi

directors. There are no barriers between internal
directors and external directors, so discussions are
extremely impassioned.
Although discussions can sometimes become
emotional, ultimately, objective judgments are madeabout what is beneficial and what is not. Discussions
with external directors often lead to a reconsiderationof internally fixed agendas. This flexibility has beena constant at DCM since I became an external director.

Message from the President

Michio Masukawa

countries, I strive to share practical perspectives,
including compliance with applicable laws andregulations, as well as responsible management andsustainability. In this age of globalization anddigitalization, the application of laws and regulations
is becoming increasingly complex. Taking into accountregulatory trends in other countries, I hope to provide
a unique outside perspective through participation invarious discussions.

Business Model

Supporting Sustainable Corporate Growth with
Recommendations from External Perspectives

ValuesExternal Director Roundtable Discussion

Oguchi: Similar to Ms. Iba, I also feel that DCM has
an open and flexible corporate culture. Continuously
incorporating new perspectives while aiming for DCM
sustainable growth, there is a sense of unity in the desire
to contribute to society. I also find that when external
directors ask questions or make comments, we receive
immediate feedback and changes are implemented
rapidly.
Masukawa: I like the fact that there are no discouraging
responses to the opinions expressed by external

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Corporate Governance 4

ValuesFinancial Highlights

DCM Holdings Co., Ltd. Integrated Report 2023

Masukawa: DCM has risen to the top class in its industry
in a short period of time through management
integrations and proactive M&A efforts. Because of this
rapid growth, there are many occasions when I feel that
“I am in a position to protect what has been built up.”
For DCM to continue growing, I will continuously
emphasize the “importance of breaking free from theconventional way of doing things.”
I have seen many management integrations and
M&A projects, but I never saw a case where the acquiredcompany, its employees, and its culture were valued ashighly as DCM values its acquisitions. I look forward toworking with other external directors to contribute to
DCM management so that this valuable success story
can be further developed.

Risk Management and Compliance48

Corporate Governance

Masukawa: We are no longer in an age when national
economic growth driven by an increasing population
leads to prosperity. DCM's ongoing transformation ofexisting stores and pursuit of the “giving shape to yourdreams for life” concept are deeply meaningful corporate
activities that will improve quality of life and ultimately

Oguchi: As the world enters a period of great changeamid discontinuous environmental changes, I hope DCM
is able to move forward, examining past experiences anddata while anticipating customer needs with an
overwhelming sense of speed and increasingly free andflexible ideas. To this end, I would also like to sharedifferent perspectives based on experiences from mydaily interactions outside DCM and outside Japan.

Sustainability

Uno: I think the platform concept is important for DCM.
Placing new business and IT on a platform combining
physical stores that successfully utilize IT with
e-commerce will create new value. If this structure canbe solidified and maintained, DCM will be able to further
incorporate new companies into the Group and growsteadily going forward.
The DCM Company Philosophy “giving shape toyour dreams for life” is one of my favorite phrases.
We learned during the pandemic that society does not
function properly without the power of essential
workers. DCM’s business of “reliably providing daily life
necessities” is truly essential. I believe the mostimportant aspect of DCM sustainable growth is todevelop business that never deviates from “giving shape
to your dreams for life.”

Iba: How DCM confronts the discontinuous
environmental changes Ms. Oguchi mentioned is critical
for the achievement of sustainable growth. To remain
connected with customers who are also undergoing
discontinuous changes, DCM must maintain a deep andconstant understanding of its customers. At the sametime, in addition to understanding customers, DCM must
maintain initiatives and efforts facilitating customer
understanding of DCM. When DCM DIY Place opened at
Ebisu Garden Place in central Tokyo, it was as a new
beginning for DCM, which up to then had only opened
stores in suburban areas. This move led to increased
media exposure, and I was subsequently contacted byan acquaintance who said it was their first-time hearingof DCM. This experience made me realize that marketing
activities aimed at connecting with customers is anotherarea to focus on in pursuing DCM growth.
In regards to DCM’s seriousness, there is one
additional point I would like to make. I think theseriousness everyone mentioned is a major positive for
DCM. I think there is substantial room for growth if
speed and boldness, which are considered lacking,are incorporated into the Company’s overall cultureof seriousness.

Iba: In my case, I am not yet familiar with the home
center business itself, so I try to be as specific as possible
in my remarks from the dual perspectives of “deeply
understanding customers” and “facilitating customer
understanding.”
At the same time, as I continue to follow the latest
trends and technologies overseas, I feel strongly that weshould have a sense of urgency about discontinuous
environmental changes—in other words, we need tothink about “a future beyond simply maintaining thestatus quo," and I am willing to speak up when I think itappropriate. I also want to continue sharing facts and thelatest case studies that I feel illustrate this idea throughstudy groups and other methods.

Medium-Term Management Plan

Oguchi: With approximately 680 physical storesthroughout Japan, DCM can be seen as a provider ofsocial infrastructure. Each store will connect people,
goods, and services while remaining aware of thechanging needs of local customers and utilizing theconvenience of e-commerce. Through these efforts, wehope to become a corporate group that can substantiallycontribute to the revitalization of Japanese society by
confronting current and future social issues head-on andplaying the role demanded by local communities.

Uno: One of DCM’s strengths is that it takes businessseriously. However, I am concerned that this degree ofseriousness may lead to an inability to break with thepast and make a fresh start. In addition to being serious
and honest, it is also important that DCM communicate
its presence to the world. For example, we should makeit more widely known that DCM contributes to local
communities through the in-store recycling of waste,
DIY educational activities for parents and children, andother initiatives.
I would also like to see the further promotion ofdiversity, including the active participation of women.
I hope to see excellence in the functions and cost of
products developed by DCM, as well as productplanning that incorporates women’s perspectives.

Message from the President

Overcoming Challenges to Achieve
Further GrowthBusiness Model

Oguchi: I am aware of two main issues. The first is to
speak freely without intimidation. I hope that conveying
the experiences and perspectives I have accumulated indifferent countries and industries from my position
outside the Company will lead to the further invigorationof discussions inside DCM.
The second issue is to become a point of contact
between DCM and the outside world. In this age of
discontinuous change, I think some interesting chemical
reactions may result from the expansion of networks inJapan and abroad extending from different channels.

lead to human happiness. The expansion of the home
center industry has revolutionized the structure of the
distribution industry and affected the way people shop.
I believe that, as a leading Company in the home center
industry, DCM must fulfill its corporate responsibility bycreating a mechanism enabling people throughout Japan
to conveniently obtain quality products and services
in order to achieve sustainable growth.

Masukawa: Corporate culture is cultivated by humanresources. I look forward to human resource changes,
especially at the middle management level, for the goodof DCM’s future. From my participation at Board of
Directors’ and other meetings, I am well aware that DCM
upper management is quite aggressive in their thinking.
DCM’s transformation will be further accelerated if
middle managers, who transform upper management
intentions into action, are more willing to take onchallenges rather than simply defending their existing
privileges and work procedures.

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