Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.

Securities Code: 7038
March 11, 2024
To Our Shareholders:
Shoichiro Onishi, Representative Director
Frontier Management Inc.
3-2-1 Roppongi, Minato-ku, Tokyo, Japan

Notice of the 17th Annual General Meeting of Shareholders
You are cordially notified that the 17th Annual General Meeting of Shareholders of Frontier Management Inc. (the“Company”) will be held as stated below.
In convening the General Meeting of Shareholders, the Company has taken measures to provide electronically the
information that is the content of the Reference Documents for the General Meeting of Shareholders, etc. (thematters to be electronically provided) and posted such information on each of the websites shown below on theInternet. You are kindly requested to access one of the following websites to review the information.
The Company’s website:
https://www.frontier-mgmt.com/ (in Japanese)(Please access the above website to select from the menu “IR,” and then “General Meeting of Shareholders”
to review the information.)
Website on which the materials for the General Meeting of Shareholders are posted:
https://d.sokai.jp/7038/teiji/ (in Japanese)
Tokyo Stock Exchange’s website (TSE’s Company Announcements Service for listed companies):
https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show (in Japanese)(Please access the above website and enter “FRONTIER MANAGEMENT” in “Security Name (Company
Name)” or the Company’s securities code “7038” in “Code” to search, select “Basic information” and then“Documents for public inspection/PR information,” and see the “Convocation notices/documents forshareholder meetings” column under “Documents for public inspection.”)If you are unable to attend the meeting, you can exercise your voting rights in writing or via the Internet.
After reviewing the Reference Documents for the General Meeting of Shareholders, please exercise yourvoting rights by indicating your approval or disapproval of each of the proposals on the voting form
provided together with this notice and return the voting form, or by accessing the designated website forexercising voting rights (https://evote.tr.mufg.jp/) and entering your vote for approval or disapproval.
Either way, please exercise your voting rights by no later than 6 p.m. on Tuesday, March 26, 2024 (JST).

11. Date and Time:

Wednesday, March 27, 2024, at 10 a.m. (JST)(The reception desk opens at 9:30 a.m.)

2. Venue:

Belle Salle Roppongi Grand Conference Center,
Sumitomo Fudosan Roppongi Grand Tower, 9th floor
3-2-1 Roppongi, Minato-ku, Tokyo, Japan

3. Purpose of the Meeting
Matters to be reported:

1. Business Report and Consolidated Financial Statements for the 17th fiscal year
(from January 1, 2023 to December 31, 2023) and audit results of Consolidated
Financial Statements by Accounting Auditor and the Audit & Supervisory
Board
2. Non-consolidated Financial Statements for the 17th fiscal year (from January
1, 2023 to December 31, 2023)

Matters to be resolved:
Proposal No. 1

Dividends of Surplus

Proposal No. 2

Amendment to the Articles of Incorporation

Proposal No. 3

Election of Two Directors (Excluding Directors who are Audit and Supervisory
Committee Members)

Proposal No. 4

Election of Four Directors who are Audit and Supervisory Committee
Members

Proposal No. 5

Determination of Amount of Compensation, etc., for Directors (Excluding
Directors who are Audit and Supervisory Committee Members)

Proposal No. 6

Determination of Amount of Compensation, etc., for Directors who are Audit
and Supervisory Committee Members

Proposal No. 7

Partial Revision of Amount and Content of Restricted Stock-Based
Compensation for Directors (Excluding Directors who are Audit andSupervisory Committee Members and Outside Directors)

2

・ When attending the meeting in person, please hand in the voting form as an attendance slip at the reception
desk at the meeting venue.
・ Please also bring with you this Notice of the Annual General Meeting of Shareholders as a reference at themeeting.
・ Only shareholders can enter the venue on the day of the event. In the case of proxy attendance, the proxymust also be a shareholder. In addition to the voting form to be exercised as a proxy and a written document
certifying the authority of proxy, please submit the voting form in the name of the proxy.
・ If you wish to make a diverse exercise of your voting rights (voting for and against the same proposal),please advise us three days prior to the Annual General Meeting of Shareholders, with your reasons therefor.
・ If any changes are made to the matters to be electronically provided, such change will be announced oneach of the websites shown above on the Internet, together with information before and after the changes.
・ In accordance with the amendment to the Companies Act, shareholders shall confirm the matters subject tomeasures for electronic provision by accessing any of the websites shown above on the Internet as a general
rule. The Company shall send paper-based documents only to shareholders who have requested the deliveryof paper-based documents by the reference date, but for this General Meeting of Shareholders, the Company
shall send paper-based documents stating the matters subject to measures for electronic provision to allshareholders regardless of whether or not delivery of paper-based documents has been requested.
Among matters for which measures for providing information in electronic format are to be taken, thefollowing matters are not included in the documents to be delivered in accordance with laws and regulations
and Article 15 of the Company’s Articles of Incorporation.
(i) “Matters Related to Stock Acquisition Rights of the Company,” “Accounting Auditor,” “Overview of
the System to Ensure Appropriateness of Business Operations,” “Overview of the Operational Status of
the System to Ensure Appropriateness of Business Operations,” and “Basic Policy Regarding Controlof the Company” of the Business Report(ii) “Consolidated Statement of Shareholders’ Equity” and “Notes to the Consolidated Financial
Statements” of the Consolidated Financial Statements(iii) “Non-consolidated Statement of Shareholders’ Equity” and “Notes to the Non-consolidated Financial
Statements” of the Non-consolidated Financial Statements
The business report, consolidated financial statements, and non-consolidated financial statements attachedto such documents are part of the documents audited by the Accounting Auditor when preparing theaccounting audit report and the same documents audited by the Audit & Supervisory Board in preparing theaudit report.

3

Reference Documents for the General Meeting of Shareholders
Proposal No. 1

Dividends of Surplus

The Company maintains a basic policy of paying stable dividends on a continual basis, while securing sufficientinternal reserves to develop future business and enhance the management structure of the Company group (the“Group”).
In accordance with the above basic policy, the Company proposes to pay a year-end dividend for the fiscal year as
follows:(1) Type of dividend property

To be paid in cash.

(2) Allotment of dividend property andtheir aggregate amountThe Company proposes to pay a dividend of ¥41 per common shareof the Company.
In this event, the total dividends will be ¥480,460,714.

(3) Effective date of dividends ofsurplus

March 28, 2024

4

Proposal No. 2

Amendment to the Articles of Incorporation

1. Reasons for the Amendment(1) In order to further enhance corporate governance and sustainably increase corporate value by further
strengthening the supervisory functions of the Board of Directors and increasing the agility of theexecution of operations, the Company proposes to transition to a company with audit and supervisorycommittee. In line with this transition, the Company will make amendments including the creation of newprovisions related to Audit and Supervisory Committee Members and the Audit and Supervisory
Committee, the creation of new provisions related to the delegation of authority for decisions concerning
the execution of important operations to Directors, and the deletion of provisions related to Audit &Supervisory Board Members and the Audit & Supervisory Board, as required for the transition to acompany with audit and supervisory committee.
(2) In line with each of the aforementioned amendments, the numbering of articles, etc., will be amended.
2. Description of the Amendment
The proposed amendments are as follows. Furthermore, the amendments to the Articles of Incorporation inthis proposal shall take effect at the conclusion of this meeting.
The Articles of Incorporation currently in force
Articles 1 to 9 (Omitted)(Shareholder Registry Administrator)
Article 10
1. The Company shall have a shareholder registryadministrator.
2. The shareholder registry administrator and its businessoffices shall be determined by a resolution of the Board of
Directors.
3. The Company shall have the shareholder registry, thelist of stock acquisition rights and the list of lost sharecertificates maintained at the business offices of theshareholder registry administrator. It shall delegate to theshareholder registry administrator the recording or
registration in the shareholder registry, the list of stockacquisition rights and the list of lost share certificates, aswell as other administrative work related to its stock andstock acquisition rights, and shall not engage in such workon its own.
(Share Handling Rules)
Article 11
The recording or registration in the shareholder registry, thelist of stock acquisition rights and the list of lost sharecertificates of the Company as well as other administration in
relation to its stock and stock acquisition rights and their fees,in addition to matters stipulated by laws and regulations or the
Articles of Incorporation, shall be in accordance with theshare handling rules adopted by the Board of Directors.
Articles 12 to 20 (Omitted)(Number of the Directors)
Article 21
The number of the Directors of the Company shall be seven or
less.
Article 22 (Omitted)(Underlined sections indicate changed parts.)
Proposed amendments
Articles 1 to 9 (Unchanged)(Shareholder Registry Administrator)
Article 10
1. The Company shall have a shareholder registryadministrator.
2. The shareholder registry administrator and its businessoffices shall be determined by a resolution of the Board of
Directors or the decision of a Director as delegated byresolution of the Board of Directors.
3. The Company shall have the shareholder registry, thelist of stock acquisition rights and the list of lost sharecertificates maintained at the business offices of theshareholder registry administrator. It shall delegate to theshareholder registry administrator the recording or
registration in the shareholder registry, the list of stockacquisition rights and the list of lost share certificates, aswell as other administrative work related to its stock andstock acquisition rights, and shall not engage in such workon its own.
(Share Handling Rules)
Article 11
The recording or registration in the shareholder registry, thelist of stock acquisition rights and the list of lost sharecertificates of the Company as well as other administration in
relation to its stock and stock acquisition rights and their fees,in addition to matters stipulated by laws and regulations or the
Articles of Incorporation, shall be in accordance with theshare handling rules adopted by the Board of Directors or a
Director as delegated by resolution of the Board of Directors.
Articles 12 to 20 (Unchanged)(Number of the Directors)
Article 21
The number of the Directors of the Company shall be ten or
less.
Article 22 (Unchanged)

5The Articles of Incorporation currently in force(Term of Office of a Director)
Article 23
1. The term of office of a Director shall be until theconclusion of an annual general meeting of shareholders
relating to the last fiscal year among fiscal years ending
within two years following his or her election.

Proposed amendments(Term of Office of a Director)
Article 23
1. The term of office of a Director (excluding Directors
who are Audit and Supervisory Committee Members)
shall be until the conclusion of an annual general meetingof shareholders relating to the last fiscal year among fiscal
years ending within one year following his or her election.
<Newly establish>
2. The term of office of a Director who is an Audit andSupervisory Committee Member shall be until theconclusion of an annual general meeting of shareholders
relating to the last fiscal year among fiscal years ending
within two years following his or her election.
3. The term of office of a Director (excluding Directors
2. The term of office of a Director elected as a substitutefor a Director who has resigned before his or her term
who are Audit and Supervisory Committee Members)
expires or elected in order to increase the number ofelected as a substitute for a Director (excluding Directors
Directors shall be the same as the remaining term of the
who are Audit and Supervisory Committee Members) who
predecessor or the terms of office of the other currently
has resigned before his or her term expires or elected inserving Directors.
order to increase the number of Directors (excluding
Directors who are Audit and Supervisory Committee
Members) shall be the same as the remaining term of thepredecessor or the terms of office of the other currently
serving Directors (excluding Directors who are Audit andSupervisory Committee Members).
<Newly establish>
4. The term of office of a Director who is an Audit andSupervisory Committee Member elected as a substitutefor a Director who is an Audit and Supervisory Committee
Member who has resigned before his or her term expires
shall be the same as the remaining term of the preceding
Director who is an Audit and Supervisory Committee
Member.
Article 24 (Omitted)
Article 24 (Unchanged)(Compensation)(Compensation)
Article 25
Article 25
Compensation, bonuses, and other financial benefits that theCompensation, bonuses, and other financial benefits that the
Directors receive from the Company for executing their duties
Directors receive from the Company for executing their duties(the “Compensation, Etc.”) shall be determined based on a(the “Compensation, Etc.”) shall be determined based on a
resolution of a general meeting of shareholders, with aresolution of a general meeting of shareholders.
distinction between Directors who are Audit and Supervisory
Committee Members and other Directors.
(Representative Director(s) and Directors with Executive Titles) (Representative Director(s) and Directors with Executive Titles)
Article 26
Article 26
1. The Company shall select a Representative Director(s)1. The Company shall select a Representative Director(s)by a resolution of the Board of Directors.
from among the Directors (excluding Directors who are
Audit and Supervisory Committee Members) by aresolution of the Board of Directors.
2. A Representative Director shall represent the company
2. A Representative Director shall represent the company
and execute its business.
and execute its business.
3. If all of the Representative Directors are prevented
3. If all of the Representative Directors are prevented
from acting so, another Director (excluding Directors whofrom acting so, another Director in accordance with theorder pre-designated by the Board of Directors shallare Audit and Supervisory Committee Members) in
perform their duties in their place.
accordance with the order pre-designated by the Board of
Directors shall perform their duties in their place.
4. The Board of Directors may select from among the
4. The Board of Directors may select, by its resolution,
one Chairperson and Director, one President and Director,
Directors (excluding Directors who are Audit andand one or more Deputy Presidents and Directors, Senior
Supervisory Committee Members), by its resolution, one
Managing Directors, and Managing Directors,
Chairperson and Director, one President and Director, andrespectively.
one or more Deputy Presidents and Directors, Senior
Managing Directors, and Managing Directors,
respectively.

6

The Articles of Incorporation currently in force(Notice for Convening a Meeting of the Board of Directors)
Article 27
1. A meeting of the Board of Directors shall be convened
by a Representative Director in accordance with the orderpre-designated by the Board of Directors, with a notice forthe meeting to be sent to each Director and Audit &Supervisory Board Member by no later than three days
before the date of the meeting, the length of which may be
shortened in case of an urgent matter.
2. A meeting of the Board of Directors may be convened
without a notice for the meeting if the consent of all the
Directors and Audit & Supervisory Board Members is
obtained.
Article 28 (Omitted)<Newly establish>

Proposed amendments(Notice for Convening a Meeting of the Board of Directors)
Article 27
1. A meeting of the Board of Directors shall be convened
by a Representative Director in accordance with the orderpre-designated by the Board of Directors, with a notice forthe meeting to be sent to each Director by no later than
three days before the date of the meeting, the length ofwhich may be shortened in case of an urgent matter.
2. A meeting of the Board of Directors may be convened
without a notice for the meeting if the consent of all the
Directors is obtained.
Article 28 (Unchanged)(Delegation of Decisions on the Execution of Important
Operations to Directors)
Article 29
In accordance with the provisions of Article 399-13, paragraph(6) of the Companies Act, the Company may delegate to
Directors all or part of decisions on the execution of important
operations (excluding the matters set forth in each item ofparagraph (5) of the same) by resolution of the Board of
Directors.
(Omission of Resolutions by the Board of Directors)
Article 30
If a Director makes a proposal on any agenda item subject toresolution by the Board of Directors and all Directors who areentitled to participate in the vote on such agenda item
unanimously agree to his or her proposal in writing or byelectromagnetic means, the Company shall deem that suchproposal is adopted by a resolution by the Board of Directors.

(Omission of Resolutions by the Board of Directors)
Article 29
If a Director makes a proposal on any agenda item subject toresolution by the Board of Directors and all Directors who areentitled to participate in the vote on such agenda item
unanimously agree to his or her proposal in writing or byelectromagnetic means, the Company shall deem that suchproposal is adopted by a resolution by the Board of Directors,
except where an Audit & Supervisory Board Member(s)object.
(Minutes of a Meeting of the Board of Directors)(Minutes of a Meeting of the Board of Directors)
Article 30
Article 31
An outline of proceedings and the results of a meeting of theAn outline of proceedings and the results of a meeting of theBoard of Directors as well as other items stipulated by laws
Board of Directors as well as other items stipulated by laws
and regulations shall be stated or recorded in the minutes, andand regulations shall be stated or recorded in the minutes, andthey shall have a seal affixed or be signed electronically by the they shall have a seal affixed or be signed electronically by the
Directors and Audit & Supervisory Board Members attending
Directors attending the meeting.
the meeting.
Chapter 5 Audit & Supervisory Board Members and the
Chapter 5 Audit and Supervisory Committee
Audit & Supervisory Board(Audit & Supervisory Board Members and the Establishment of
the Audit & Supervisory Board, as well as the Number of Such
Members, Authority and Method of Election Thereof)
Article 31<Delete>
1. The Company shall have Audit & Supervisory Board
Members with the Audit & Supervisory Board
established, and the number of such members shall befour or less.
2. An Audit & Supervisory Board Member of theCompany shall be elected by a majority of voting rights ofthe shareholders present when shareholders holding onethird or more of the voting rights held by shareholders
who are entitled to exercise voting rights at a general
meeting of shareholders are present.

7

The Articles of Incorporation currently in force(Term of Office of an Audit & Supervisory Board Member)
Article 32
1. The term of office of an Audit & Supervisory Board
Member shall be until the conclusion of an annual general
meeting of shareholders relating to the last fiscal year
among fiscal years ending within four years following his
or her election.
2. The term of office of an Audit & Supervisory Board
Member elected as a substitute for an Audit &Supervisory Board Member who has resigned before hisor her term expires shall be the same as the remaining
term of the predecessor.
(Exemption of Liability of the Audit & Supervisory Board
Members)
Article 33
1. The Company may, pursuant to the provisions ofArticle 426, paragraph (1) of the Companies Act, exempt
an Audit & Supervisory Board Member (including former
Audit & Supervisory Board Members) from liability due
to non-performance of his or her duties under Article 423,
paragraph (1) of the said Act, to the extent that it ispermitted by laws and regulations, by a resolution of theBoard of Directors.
2. The Company may enter into an agreement with an
Audit & Supervisory Board Member to limit his or her
liability for damages under Article 423, paragraph (1) of
the Companies Act to the extent that it is permitted bylaws and regulations, pursuant to the provisions of Article
427, paragraph (1) of the said Act.
(Compensation)
Article 34
Compensation, Etc. for the Audit & Supervisory Board
Members shall be determined based on a resolution of ageneral meeting of shareholders.
(Full-time Audit & Supervisory Board Member)
Article 35
The Audit & Supervisory Board shall select, by its resolution,a full-time Audit & Supervisory Board Member from the
Audit & Supervisory Board Members.
(Notice for Convening a Meeting of the Audit & Supervisory
Board)
Article 36
1. A notice for a meeting of the Audit & Supervisory
Board shall be sent to each Audit & Supervisory Board
Member by no later than three days before the date of themeeting, the length of which may be shortened in case ofan urgent matter.
2. A meeting of the Audit & Supervisory Board may be
convened without a notice for the meeting if the consent
of all the Audit & Supervisory Board Members is
obtained.
(Resolutions of the Audit & Supervisory Board)
Article 37
The resolutions of the Audit & Supervisory Board shall bemade by a majority of the Audit & Supervisory Board
Members, except where otherwise stipulated by laws andregulations.

Proposed amendments<Delete><Delete><Delete><Delete><Delete><Delete><Delete>8

The Articles of Incorporation currently in force(Minutes of a Meeting of the Audit & Supervisory Board)
Article 38
An outline of proceedings and the results of a meeting of the
Audit & Supervisory Board as well as other items stipulated
by laws and regulations shall be stated or recorded in theminutes, and they shall have a seal affixed or be signed
electronically by the Audit & Supervisory Board Members
attending to the meeting.
(Rules for the Audit & Supervisory Board)
Article 39
Matters pertaining to the Audit & Supervisory Board shall bebased on the rules for the Audit & Supervisory Board which isestablished by the Audit & Supervisory Board, in addition to
those stipulated by laws and regulations or the Articles ofIncorporation.

<Newly establish><Newly establish><Newly establish><Newly establish><Newly establish>

Articles 40 to 42 (Omitted)

Proposed amendments<Delete><Delete>(Establishment of the Audit and Supervisory Committee andFull-time Audit and Supervisory Committee Member)
Article 32
1. The Company shall have an Audit and Supervisory
Committee.
2. The Audit and Supervisory Committee may select, by
its resolution, a full-time Audit and Supervisory
Committee Member.
(Notice for Convening a Meeting of the Audit and Supervisory
Committee)
Article 33
1. A notice for a meeting of the Audit and Supervisory
Committee shall be sent to each Audit and Supervisory
Committee Member by no later than one week before thedate of the meeting; provided, however, that this period
may be shortened if urgency is required.
2. A meeting of the Audit and Supervisory Committee
may be convened without completing the convocation
procedures if the consent of all the Audit and Supervisory
Committee Members is obtained.
(Method of Resolutions of the Audit and Supervisory
Committee)
Article 34
The resolutions of the Audit and Supervisory Committee shallbe made by a majority of the Audit and Supervisory
Committee Members present when a majority of the Audit andSupervisory Committee Members entitled to participate in thevote are present.
(Minutes of a Meeting of the Audit and Supervisory Committee)
Article 35
Minutes of the proceedings of a meeting of the Audit andSupervisory Committee shall be prepared pursuant to theprovisions of Ministry of Justice Order, and they shall besigned or have a seal affixed, or be signed electronically, by
the Audit and Supervisory Committee Members attending themeeting.
(Rules for the Audit and Supervisory Committee)
Article 36
Matters pertaining to the Audit and Supervisory Committee
shall be based on the rules for the Audit and Supervisory
Committee which is established by the Audit and Supervisory
Committee, in addition to laws and regulations or these
Articles of Incorporation.
Articles 37 to 39 (Unchanged)

9The Articles of Incorporation currently in force(Compensation)
Article 43
Compensation, Etc. for the Accounting Auditor shall be
determined by the Representative Director subject to consent
from the Audit & Supervisory Board.
Articles 44 to 47 (Omitted)<Newly establish>

Proposed amendments(Compensation)
Article 40
Compensation, Etc. for the Accounting Auditor shall be
determined by the Representative Director subject to consent
from the Audit and Supervisory Committee.
Articles 41 to 44 (Unchanged)
Supplementary Provisions(Transitional Measures Related to the Exemption of Liability of
the Audit & Supervisory Board Members)
The Company may exempt an Audit & Supervisory Board
Member (including former Audit & Supervisory Board
Members) from liability related to actions prior to theconclusion of the 17th Annual General Meeting of
Shareholders under Article 423, paragraph (1) of theCompanies Act, to the extent that it is permitted by laws andregulations, by a resolution of the Board of Directors.

10

Proposal No. 3

Election of Two Directors (Excluding Directors who are Audit and Supervisory
Committee Members)

At the conclusion of this meeting, the terms of office of six Directors will expire. In addition, if Proposal No. 2“Amendment to the Articles of Incorporation” is approved, the Company will transition to a company with audit
and supervisory committee. In line with this transition, the Company proposes the election of two Directors(excluding Directors who are Audit and Supervisory Committee Members).
The effectiveness of this proposal shall be subject to the amendment to the Articles of Incorporation in Proposal
No. 2 “Amendment to the Articles of Incorporation” taking effect.
When selecting the candidates for Director (excluding Directors who are Audit and Supervisory Committee
Members), the Board of Directors decided on the candidates in consideration of voluntary deliberations by the
Nomination and Compensation Advisory Committee.
The candidates for Director (excluding Directors who are Audit and Supervisory Committee Members) are as
follows:
Candidate
No.

Name

Current position in
the Company

Attendance at Board of
Directors meetings

Number of years in
office (conclusion ofthis meeting)1

Shoichiro Onishi

Re-election

Representative
Director

14/14(100%)

17 years2

Masao Nishihara

Re-election

Director

10/10(100%)

1 year11

Candidate No. 1
Shoichiro Onishi
Re-election

Date of birth
September 25, 1963
Number of the Company’s
shares owned
2,179,458
Number of years in office17
Attendance at Board of
Directors meetings
14/14 (100%)Career summary and position and responsibility in the Company
Apr. 1992

Joined Okuno & Partners Law Office (currently OKUNO & PARTNERS)

Apr. 1997

PartnerJun. 2003

Joined Industrial Revitalization Corporation of Japan

Nov. 2003

Managing Director

Jan. 2004

Outside Corporate Auditor of Mitsui Mining Co., Ltd. (currently NIPPONCOKE & ENGINEERING. CO., LTD.)

Jun. 2004

Outside Director of Kanebo, Ltd.

Mar. 2005

Outside Director of The Daiei, Inc.

Jan. 2007

Counsel of OKUNO & PARTNERS (current position)

Jan. 2007

Founded the Company and was appointed Representative Director (current
position)

Apr. 2008

Director of MATSUMOTO ELECTRIC RAILWAY CO., LTD. (currently
ALPICO KOTSU Co., Ltd.)

Sep. 2012

Representative Director and President of Frontier Turnaround Inc.

Jul. 2016

Representative Director and Chairman

Nov. 2017

Representative Director of FCD Partners Inc. (current position)

Jun. 2020

Outside Director of Tokyo Electric Power Company Holdings,
Incorporated (current position)

Apr. 2022

Representative Director and Co- President of Frontier Capital Inc.

Sep. 2022

Representative Director, President, CEO and COO (current position)

Significant concurrent positions outside the Company
Representative Director, President, CEO and COO of Frontier Capital Inc.
Representative Director of FCD Partners Inc.
Outside Director of Tokyo Electric Power Company Holdings, Incorporated
Reasons for nomination as candidate for Director
The candidate has been overseeing the management of the whole Group as its founder over many
years and contributing to raising its corporate value. The Company proposes his election tocontinue serving as Director as it has judged that he will likely continue to manage theorganization appropriately, based on his achievements and skills as well as a wealth of experience
as a corporate top manager.

12Candidate No. 2
Masao Nishihara
Re-election

Date of birth
May 18, 1951
Number of the Company’s
shares owned
320
Number of years in office1
Attendance at Board of
Directors meetings
10/10 (100%)Career summary and position and responsibility in the Company
Apr. 1975

Joined the Ministry of FinanceJul. 2004

Director-General of the Inspection Bureau of the Financial Services
AgencyJul. 2007

Director-General of the Supervision Bureau of the Financial Services
AgencyJul. 2008

Secretary-General of the Executive Bureau of Securities and Exchange
Surveillance Commission

Aug. 2009

Senior Managing Director of Organization for Promoting Urban
Development

Jun. 2013

Vice Chairman and Senior Managing Director of Regional Banks
Association of Japan

Aug. 2022

Advisor of the Company

Mar. 2023

Director (current position)

Significant concurrent positions outside the Company–
Reasons for nomination as candidate for Director
The candidate has been contributing to raising the corporate value of the Company, utilizing his
abundant experience in fiscal and monetary policies and deep insight into the regional banking
industry, etc. gained through his career in key positions at the Financial Services Agency, theOrganization for Promoting Urban Development, and the Regional Bank Association of Japan.
The Company proposes his election to continue serving as Director as it has judged that he will
likely continue to manage the organization appropriately, utilizing the experience and knowledge
he has accumulated to date.

Notes: 1. There is no special interest between any of the candidates and the Company.
2. The Company has entered into a directors and officers liability insurance policy as provided for in Article 430-3,
paragraph (1) of the Companies Act with an insurance company, thereby covering losses that may arise from a
Director, an insured person, assuming liability incurred in the course of the performance of duties or receiving claims
pertaining to the pursuit of such liability. The candidates will be included as insured persons in such policy.
In addition, when the policy is renewed, the Company plans to renew the policy with the same terms.

13Proposal No. 4

Election of Four Directors who are Audit and Supervisory Committee Members

If Proposal No. 2 “Amendment to the Articles of Incorporation” is approved, the Company will transition to acompany with audit and supervisory committee. Accordingly, the Company proposes the election of four
Directors who are Audit and Supervisory Committee Members.
Furthermore, the consent of the Audit & Supervisory Board has been obtained for this proposal.
The effectiveness of this proposal shall be subject to the amendment to the Articles of Incorporation in Proposal
No. 2 “Amendment to the Articles of Incorporation” taking effect.
The candidates for Directors who are Audit and Supervisory Committee Members are as follows:

Candidate
No.

Name

Current position in
the Company

Attendance at Board of
Directors meetings

Number of years in
office (conclusion ofthis meeting)

1

Takeshi Umemoto

New election

Outside Audit &Supervisory Board
Member14/14(100%)

12 years(Audit & Supervisory
Board Member)

2

Kazuhito Osugi

Re-election
OutsideIndependent

Outside Director

14/14(100%)

5 years(Director)

3

Keiko Unotoro

Re-election
OutsideIndependent

Outside Director

14/14(100%)

3 years(Director)

4

Hikaru Minami

New election
OutsideIndependent––

0 years

14

Candidate No. 1
Takeshi Umemoto
New election

Career summary and position and responsibility in the Company
Mar. 1973

Joined Ito-Yokado Co., Ltd.

Nov. 1992

Securities General Manager

Jan. 1998

General Manager of Treasury and Securities Department

Jan. 2004

General Manager of Business Development Department of IY Bank Co.,
Ltd. (currently Seven Bank, Ltd.)

Jul. 2005

General Manager of General Affairs Division

May 2006

General Manager of Planning Division

Oct. 2007

General Manager of Audit & Supervisory Board Members’ OfficeJun. 2011

Counselor of Audit & Supervisory Board Members’ OfficeFeb. 2012

Outside Audit & Supervisory Board Member of the Company (current
position)

Significant concurrent positions outside the Company
Date of birthJune 8, 1950
Number of the Company’s
shares owned
40,000
Number of years in officeas Audit & Supervisory
Board Member
12
Attendance at Board of
Directors meetings
14/14 (100%)
Attendance at Audit &Supervisory Board
meetings
15/15 (100%)–
Reasons for nomination as candidate for Director who is an Audit and Supervisory
Committee Member
The candidate has contributed to increasing the corporate value of the Company, including
monitoring its management and providing it with appropriate advice as an Outside Audit &Supervisory Board Member of the Company, by using his many years of experience in audit
operations. His term in office as an Outside Audit & Supervisory Board Member to date will be
12 years at the conclusion of this meeting. The Company proposes his election as a Director who
is an Audit and Supervisory Committee Member as it has judged that he will likely execute his
duties as a Director who is an Audit and Supervisory Committee Member responsible for ensuring
the appropriateness of the execution of operations, utilizing the experience he has accumulated to
date.

15

Candidate No. 2
Kazuhito Osugi
Re-election
OutsideIndependent

Date of birth
July 31, 1953
Number of the Company’s
shares owned0
Number of years in officeas Director
5
Attendance at Board of
Directors meetings
14/14 (100%)Career summary and position and responsibility in the Company
Apr. 1977

Joined Bank of Japan

Nov. 1986

Economist of Bank for International Settlements (BIS)

Jun. 1999

Branch Manager of Matsumoto Branch of Bank of JapanMay 2001

Deputy Branch Manager of Osaka Branch

May 2003

RM Manager and Senior Director of Industrial Revitalization Corporationof JapanJul. 2005

Deputy Director-General of Financial System and Bank Examination
Department and Head of Center for Advanced Financial Technology ofBank of JapanMay 2006

Internal Auditor and Director-General of Internal Auditors’ Office

Apr. 2007

Director-General of Secretariat of the Policy Board

Apr. 2009

Visiting Professor of Ochanomizu University

Sep. 2011

Auditor of Bank of Japan

Oct. 2015

Advisor of Security Transport Business Division of Nippon Express
Company, Limited

Apr. 2016

Part-time Advisor of the Company

Jun. 2016

Independent Outside Director of the Board of Nissha Printing Co., Ltd.
(currently Nissha Co., Ltd.) (current position)

Aug. 2018

Outside Director of the Company (current position)

Jun. 2021

Outside Director of The Gunma Bank, Ltd. (current position)

Significant concurrent positions outside the Company
Independent Outside Director of the Board of Nissha Co., Ltd.
Outside Director of The Gunma Bank, Ltd.
Reasons for nomination as candidate for Director who is an Audit and Supervisory
Committee Member
The candidate has contributed to increasing the corporate value of the Company, including
increasing the transparency of the Company and further strengthening corporate governance, by
providing various types of advice as an Outside Director, etc., by tapping into the in-depth
knowledge in economy, finance, and business revitalization that he accumulated through serving
in key posts at the Bank of Japan and Industrial Revitalization Corporation of Japan. Accordingly,
the Company proposes his election to continue serving as a Director as it has judged that he will
likely appropriately execute his duties, including supervising the management of the Company,
utilizing the experience and insight he has accumulated to date. The Company expects that he will
help the organization grow and reinforce its corporate governance to a greater extent. This isbecause, after his election, we will have him audit and supervise management from an objective
standpoint that is independent of the execution of operations, as an Outside Director who is an
Audit and Supervisory Committee Member of the Company, and we hope to obtain advice from
him on the overall management of the Company.
As he meets the requirements for independent officers stipulated by the Tokyo Stock Exchange,
the Company has decided that there is no conflict of interest with general shareholders and plans
to designate him as an independent officer. He has never in the past been involved in the
management of a company except as an outside officer. However, the Company judges he willappropriately fulfill his duties as an Outside Director based on the above reasons.

16Candidate No. 3
Keiko Unotoro
Re-election
OutsideIndependent

Date of birth
October 26, 1954
Number of the Company’s
shares owned0
Number of years in officeas Director
3
Attendance at Board of
Directors meetings
14/14 (100%)Career summary and position and responsibility in the Company
Apr. 1977

Joined Secretariat of Japan Fair Trade Commission

Apr. 2000

Part-time Lecturer of Graduate School of Economics of Senshu University

Jun. 2004

Chief Hearing Examiner of General Secretariat of Japan Fair Trade
Commission

Jan. 2007

Director General of Trade Practices Department

Jun. 2008

Senior Deputy Secretary General of Secretariat

Jan. 2011

Director General of Economic Affairs Bureau

Nov. 2012

Advisor of OH-EBASHI LPC & PARTNERS

Apr. 2013

Professor of Faculty of Business Administration of Toyo Gakuen
University

Jun. 2013

Outside Director of Olympus Corporation

Mar. 2015

Outside Director of Bridgestone Corporation

Jun. 2019

Outside Director of SAN-AI OIL CO., LTD. (currently SAN-AI OBBLI
CO., LTD.) (current position)

Dec. 2019

Member of Investment and Miscellaneous Issues Working Group of
Council for Regulatory Reform

Apr. 2020

Specially Appointed Professor of Faculty of Business Administration of
Toyo Gakuen University

Apr. 2020

Outside Director (Audit and Supervisory Committee Member) of OS Co.,
Ltd. (current position)

Aug. 2020

Outside Director of OHBA CO., LTD. (current position)

Jan. 2021

Commissioner of Public Security Examination Commission (current
position)Mar. 2021

Outside Director of the Company (current position)

Sep. 2022

Auditor of Tokyo Metropolitan Public University Corporation (current
position)Jan. 2024

Advisor of T&K Partners (current position)

Significant concurrent positions outside the Company
Outside Director of SAN-AI OBBLI CO., LTD., Outside Director of OHBA CO., LTD.,
Commissioner of Public Security Examination Commission, and Auditor of Tokyo Metropolitan
Public University Corporation
Reasons for nomination as candidate for Director who is an Audit and Supervisory
Committee Member
The candidate has contributed to increasing the corporate value of the Company, including
increasing the transparency of the Company and further strengthening corporate governance, by
providing various types of advice as an Outside Director, etc., by tapping into the in-depth
knowledge in economic laws, competition policies, and corporate compliance that she
accumulated through serving in key posts at the Fair Trade Commission. Accordingly, theCompany proposes her election to continue serving as a Director as it has judged that she will
likely appropriately execute her duties, including supervising the management of the Company,
utilizing the experience and insight she has accumulated to date. The Company expects that she
will help the organization grow and reinforce its corporate governance to a greater extent. This isbecause, after her election, we will have her audit and supervise management from an objective
standpoint that is independent of the execution of operations, as an Outside Director who is an
Audit and Supervisory Committee Member of the Company, and we hope to obtain advice fromher on the overall management of the Company.
As she meets the requirements for independent officers stipulated by the Tokyo Stock Exchange,
the Company has decided that there is no conflict of interest with general shareholders and plans
to designate her as an independent officer. She has never in the past been involved in the
management of a company except as an outside officer. However, the Company judges she willappropriately fulfill her duties as an Outside Director based on the above reasons.

17Candidate No. 4

Career summary and position and responsibility in the Company
Apr. 1979

Joined Marubeni Corporation

Hikaru Minami

Apr. 2010

Executive Officer and Head of Finance, Logistics, and Information
Division

New election

Apr. 2013

Managing Executive Officer and Head of Information, Finance, and Real
Estate Division

Apr. 2015

Managing Executive Officer; CAO; CIO; Assistant
to Director of Audit Dept.; Chairman of Compliance Committee;
Chairman of Internal Control Committee; Chairman of IT Strategy
Committee; and Vice Chairman of Investment and Credit Committee

Jun. 2015

Representative Director; Managing Executive Officer; CAO; CIO;
Assistant to Director of Audit Dept.; Chairman of Compliance Committee;
Chairman of Internal Control Committee; Chairman of IT Strategy
Committee; and Vice Chairman of Investment and Credit Committee

Nov. 2017

Representative Director; Managing Executive Officer; CAO; CIO;
Assistant to Director of Audit Dept.; Assistant to Director of New Office
Building Project Office; Chairman of Compliance Committee; Chairmanof Internal Control Committee; Chairman of IT Strategy Committee; andVice Chairman of Investment and Credit Committee

Apr. 2018

Representative Director; Managing Executive Officer; and Chief
Executive Officer, Consumer Products Group

Jun. 2018

Managing Executive Officer and Chief Executive Officer, Consumer
Products Group

Apr. 2019

Managing Executive Officer

Jun. 2019

Audit & Supervisory Board Member

OutsideIndependent

Date of birth
February 25, 1957
Number of the Company’s
shares owned0
Number of years in office–Attendance at Board of
Directors meetings–
Attendance at Audit &Supervisory Board
meetings–

Significant concurrent positions outside the Company–
Reasons for nomination as candidate for Director who is an Audit and Supervisory
Committee Member
Since joining Marubeni Corporation, Mr. Minami has mainly engaged in operations related tofinance, accounting, logistics, information, and real estate, and has served as Audit & Supervisory
Board Member, after serving as Managing Executive Officer and Representative Director. The
Company proposes his election as Director as it has judged that he will be able to contribute toincreasing the corporate value of the Company in the future, based on his expertise related tofinance and accounting and knowledge related to all aspects of the management of general trading
companies and global business management, through his operational experience to date.
The Company expects that he will help the organization grow and reinforce its corporate
governance to a greater extent. This is because, after his election, we will have him audit andsupervise management from an objective standpoint that is independent of the execution ofoperations, as an Outside Director who is an Audit and Supervisory Committee Member of theCompany, and we hope to obtain advice from him on the overall management of the Company.
As he meets the requirements for independent officers stipulated by the Tokyo Stock Exchange,
the Company has decided that there is no conflict of interest with general shareholders and plans
to designate him as an independent officer.

18Notes: 1. There is no special interest between any of the candidates and the Company.
2. Kazuhito Osugi, Keiko Unotoro, and Hikaru Minami are candidates for Outside Directors.
3. Pursuant to the provisions of Article 427, paragraph (1) of the Companies Act, the Company has entered into limited
liability agreements with Kazuhito Osugi and Keiko Unotoro to limit their liability for damages under Article 423,
paragraph (1) of the Companies Act, and plans to continue the agreements if their elections are approved. In addition, if
Hikaru Minami assumes office as a Director who is an Audit and Supervisory Committee Member, the Company plansto enter into a new limited liability agreement with him with the same content. Pursuant to such agreement, the defined
maximum amount of liability for damages is the minimum liability amount provided for under Article 425, paragraph(1) of the Companies Act.
4. The Company has entered into a directors and officers liability insurance policy as provided for in Article 430-3,
paragraph (1) of the Companies Act with an insurance company, thereby covering losses that may arise from a
Director, an insured person, assuming liability incurred in the course of the performance of duties or receiving claims
pertaining to the pursuit of such liability. The candidates for Directors will be included as insured persons in suchpolicy.
In addition, when the policy is renewed, the Company plans to renew the policy with the same terms.
5. The Company has submitted notification to Tokyo Stock Exchange concerning the designation of Kazuhito Osugi and
Keiko Unotoro as independent officers as provided for by the aforementioned exchange.
6. If Hikaru Minami assumes office as a Director who is an Audit and Supervisory Committee Member, the Company
plans to submit notification to Tokyo Stock Exchange concerning his designation as an independent officer as provided
for by the aforementioned exchange.

19

(Reference) Skill matrix for Directors after Proposal No. 3 and Proposal No. 4 are approved
Name

Attributes

Shoichiro Onishi

Corporate
management

Keiko Unotoro
Hikaru Minami(Audit and Supervisory
Committee Member)

●
●

●

●

●

●

OutsideIndependent

●

●

●

OutsideIndependent●

Takeshi Umemoto(Audit and Supervisory
Committee Member)

Corporateloans andinvestments●(Audit and Supervisory
Committee Member)

Kazuhito Osugi

Finance andaccounting●

Masao Nishihara(Audit and Supervisory
Committee Member)

EconomyOutsideIndependent●

Management Sales andof legal risks marketing●

Global

●

●
●

●

●

●

20

●

Environmentand society

●

●

●

Proposal No. 5

Determination of Amount of Compensation, etc., for Directors (Excluding Directors who
are Audit and Supervisory Committee Members)

If Proposal No. 2 “Amendment to the Articles of Incorporation” is approved, the Company will transition to acompany with audit and supervisory committee. Accordingly, the Company proposes to set the new amount ofmonetary compensation for Directors (excluding Directors who are Audit and Supervisory Committee Members)
at ¥350,000 thousand or less per year. As in the past, the amount of monetary compensation for Directors(excluding Directors who are Audit and Supervisory Committee Members) shall not include employee salaries
paid to Directors concurrently serving as employees.
In addition, in light of voluntary deliberations and reports by the Nomination and Compensation Advisory
Committee, which is chaired by an Outside Director, the Company has decided, by resolution of the Board of
Directors at a meeting held on February 14, 2024, to amend the “Policy on Decisions Related to the Compensationof Directors,” subject to the passing of Proposal No. 2 “Amendment to the Articles of Incorporation,” this
proposal, and Proposal No. 7 “Partial Revision of Amount and Content of Restricted Stock-Based Compensation
for Directors (Excluding Directors who are Audit and Supervisory Committee Members and Outside Directors)”
as originally proposed. An overview of this policy is provided on pages 26 to 27, but this proposal is necessary
and reasonable for determining the compensation, etc., of Directors (excluding Directors who are Audit andSupervisory Committee Members) in accordance with the changed policy.
The specific timing of payment and allocation to each Eligible Director shall be determined by the Board of
Directors of the Company, in light of deliberations and reports by the Nomination and Compensation Advisory
Committee.
If Proposal No. 2 “Amendment to the Articles of Incorporation” and Proposal No. 3 “Election of Two Directors(Excluding Directors who are Audit and Supervisory Committee Members)” are approved as originally proposed,
the number of Directors (excluding Directors who are Audit and Supervisory Committee Members) will be two.
Furthermore, the effectiveness of this proposal shall be subject to the amendment to the Articles of Incorporationin Proposal No. 2 “Amendment to the Articles of Incorporation” taking effect.

21

Proposal No. 6

Determination of Amount of Compensation, etc., for Directors who are Audit andSupervisory Committee Members

If Proposal No. 2 “Amendment to the Articles of Incorporation” is approved, the Company will transition to acompany with audit and supervisory committee.
Accordingly, the Company proposes to set the amount of monetary compensation for Directors who are Audit andSupervisory Committee Members at ¥55,000 thousand or less per year, to ensure that it is an appropriate
level for the responsibilities of Directors who are Audit and Supervisory Committee Members.
This proposal takes into consideration recent economic trends, the scale of the Company’s businesses, the futurecomposition of the Board of Directors, the responsibilities of Directors who are Audit and Supervisory Committee
Members, and various other factors, and it has determined by resolution of the Board of Directors in light ofvoluntary deliberations and reports by the Nomination and Compensation Advisory Committee, which is chairedby an Outside Director. Accordingly, the Company has judged that it is appropriate.
If Proposal No. 2 “Amendment to the Articles of Incorporation” and Proposal No. 4 “Election of Four Directors
who are Audit and Supervisory Committee Members” are approved as originally proposed, the number of
Directors who are Audit and Supervisory Committee Members will be four.
Furthermore, the effectiveness of resolutions pertaining to this proposal shall be subject to the amendment to the
Articles of Incorporation in Proposal No. 2 “Amendment to the Articles of Incorporation” taking effect.
(Reference)
Existing scheme

Proposed amendment

Monetary compensation (maximum)

Monetary compensation (maximum)

Monetary compensation for
Directors¥400,000 thousand

Monetary compensation for
Directors (excluding Directors
who are Audit and Supervisory
Committee Members)¥350,000 thousand

Monetary compensation for Audit& Supervisory Board Members¥50,000 thousand

Monetary compensation for
Directors who are Audit andSupervisory Committee Members¥55,000 thousand

Restricted stock-based compensation (maximum)

Restricted stock-based compensation (maximum)

Stock-based compensation A¥100,000 thousand

Stock-based compensation A¥130,000 thousand

Stock-based compensation B¥50,000 thousand

Stock-based compensation B¥65,000 thousand¥600,000 thousand

Total¥600,000 thousand

Total

22

Proposal No. 7

Partial Revision of Amount and Content of Restricted Stock-Based Compensation for
Directors (Excluding Directors who are Audit and Supervisory Committee Members andOutside Directors)

If Proposal No. 2 “Amendment to the Articles of Incorporation” is approved, the Company will transition to acompany with audit and supervisory committee. In line with this transition, the Company proposes to establish a
new restricted stock-based compensation scheme for Directors of the Company excluding Outside Directors, as
restricted stock-based compensation for Directors of the Company (excluding Directors who are Audit andSupervisory Committee Members and Outside Directors; hereinafter, referred to as “Eligible Directors”), and topartially amend the content of this scheme, in order to further increase corporate value.
Specifically, separately from the amount of monetary compensation proposed in Proposal No. 5 “Determination ofAmount of Compensation, etc., for Directors (Excluding Directors who are Audit and Supervisory Committee
Members),” the Company proposes: (i) the total value and total number of shares of the Company’s common
stock to be issued or disposed of as stock-based compensation A linked to single-year consolidated businessperformance at ¥130,000 thousand or less per year and 90,000 shares or less per year, respectively;and (ii) the total value and total number of shares of the Company’s common stock to be issued or disposed of as
stock-based compensation B linked to an achievement rate against medium- to long-term business plantargets and the extent of improvement of its corporate value at ¥65,000 thousand or less per year and45,000 shares or less per year, respectively.
The specific timing of payment and allocation to each Eligible Director shall be determined by the Board of
Directors of the Company, in light of voluntary deliberations and reports by the Nomination and Compensation
Advisory Committee.
Furthermore, the effectiveness of resolutions pertaining to this proposal shall be subject to the amendment to the
Articles of Incorporation in Proposal No. 2 “Amendment to the Articles of Incorporation” taking effect.

23

1. Details of Main Amendments to the Scheme(1) Amendments to single-fiscal-year performance-based compensation
Before amendment

After amendment

Single-fiscal-year performance-based compensation (cashSingle-fiscal-year performance-based compensation (cashbonuses and stock-based compensation A) is linked tobonuses and stock-based compensation A) is linked toconsolidated results for a single fiscal year and the amount ofconsolidated results for a single fiscal year and the amount ofcompensation is determined based on the Company’scompensation is determined based on the Company’s

performance results and the like for a single year, and theperformance results and the like for a single year, and thedetermined amount of compensation will be paid to Directors

determined amount of compensation will be paid to Directors(excluding Outside Directors; “Eligible Directors”) in the form

(excluding Directors who are Audit and Supervisoryof cash bonuses and restricted stock (stock-based compensation

Committee Members and Outside Directors; “EligibleA) after the results of each fiscal year are fixed.

Directors”) in the form of cash bonuses and restricted stock(stock-based compensation A) after the results of each fiscal
year are fixed.

Single-fiscal-year performance-based compensation for eachSingle-fiscal-year performance-based compensation for each

Eligible Director is composed of a cash bonus, representing

Eligible Director is composed of a cash bonus, representing

two-thirds of such compensation, and stock-based

half of such compensation, and stock-based compensation A,

compensation A, representing one-third of such compensation.

representing half of such compensation.

As indicators of consolidated business performance,

As indicators of consolidated business performance, the rate of

consolidated operating income, etc., shall be the basic

increase in the share price and the amount of consolidated net

indicators, and the amount of single-fiscal-year performance-

income excluding Frontier Capital Inc. shall be the basic

based compensation to be paid to Eligible Directors isindicators, and the amount of single-fiscal-year performance-

determined in light of: i) the degree of contribution to

based compensation to be paid to Eligible Directors is

performance; and ii) the maximum amount of compensation

determined in light of: i) the degree of contribution tofor the Eligible Directors, and the like.

performance; and ii) the maximum amount of compensation for
the Eligible Directors, and the like.

[Reasons for the amendments to this item] In line with the transition to a company with audit and supervisory committee, theCompany will establish this scheme for Directors of the Company (excluding Outside Directors) as a new scheme for Directors of
the Company (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors). In addition, theCompany has made amendments such as further enhancing the proportion of stock-based compensation as an incentive for asingle fiscal year. Furthermore, the Company has excluded Outside Directors and Directors who are Audit and Supervisory
Committee Members, who are responsible for supervisory functions, from eligibility for this scheme, in light of their
responsibilities.

24

(2) Amendments to medium- to long-term performance-based compensation
Before amendment
Medium- to long-term performance-based compensation(stock-based compensation B) is linked to the degree ofachievement of the management target for the medium-term
management plan, the degree of enhancement of corporate
value, and the like, and restricted stock (stock-based
compensation B) will be delivered to the Eligible Directors at
the beginning of each fiscal year based on the compensationbase amount in accordance with their position. In principle,
after the end of the period falling under the medium-term
management plan, the number of shares with respect to which
the transfer restriction is lifted will be determined, regarding
such shares granted during such period, in accordance with thedegree of achievement of the management target for the
medium-term management plan, the degree of enhancement ofcorporate value, and the like.
The management target indicators for the medium-term
management plan from 2021 to 2023 include the level ofachievement of the rate of growth in consolidated net sales,
consolidated operating margin, consolidated ROE, etc. If a new
medium-term management plan is formulated in the future,these management target indicators could potentially bechanged by a resolution of the Board of Directors.

After amendment
Medium- to long-term performance-based compensation(stock-based compensation B) is linked to the degree ofachievement of the management target for the medium-term
management plan, the degree of enhancement of corporate
value, and the like, and restricted stock (stock-based
compensation B) will be delivered to the Eligible Directors at
the beginning of each fiscal year based on the compensationbase amount in accordance with their position. In principle,
after the end of the period falling under the medium-term
management plan, the number of shares with respect to which
the transfer restriction is lifted will be determined, regarding
such shares granted during such period, in accordance with thedegree of achievement of the management target for the
medium-term management plan, the degree of enhancement ofcorporate value, and the like.
The management target indicators for the medium-term
management plan from 2024 to 2026 include the level ofachievement of the rate of increase in the share price, theamount of consolidated net income excluding Frontier Capital
Inc., and consolidated ROE excluding Frontier Capital Inc. If a
new medium-term management plan is formulated in the
future, these management target indicators could potentially bechanged by a resolution of the Board of Directors.

[Reasons for the amendments to this item] In light of voluntary deliberations and reports by the Nomination and Compensation
Advisory Committee, which is chaired by an Outside Director, the Company will amend matters such as the details of theconditions for the achievement of performance, as determined by resolutions of the Board of Directors, using management target
indicators related to the medium-term management plan of the Company for the period from 2024 to 2026 (the maximum amountof compensation and number of shares under stock-based compensation B are as shown in the below item (4)). Furthermore, theCompany has excluded Outside Directors and Directors who are Audit and Supervisory Committee Members, who areresponsible for supervisory functions, from eligibility for this scheme, in light of their responsibilities.

(3) Amendments to the maximum amount of compensation and number of shares for stock-based
compensation A, which is linked to consolidated performance for a single fiscal year
Before amendment
Maximum amount of stock-based compensation A:
Up to ¥100,000 thousand per year
Maximum number of Allotted Shares:
Up to 40,000 shares per year

After amendment
Maximum amount of stock-based compensation A:
Up to ¥130,000 thousand per year
Maximum number of Allotted Shares:
Up to 90,000 shares per year

[Reasons for the amendments to this item] The Company will amend the maximum amount of money to be contributed by theCompany under this scheme in order to further enhance motivation to contribute to the degree of achievement of the managementtargets, the degree of enhancement of corporate value, and the like, by further increasing the proportion of stock-based
compensation as an incentive, based on a level of compensation for Eligible Directors that is competitive in the market. In
addition, the Company will also amend the maximum number of shares to be granted to Eligible Directors (the definition of the“Allotted Shares” is as shown in “3. Details of Compensation Related to the Restricted Stock-Based Compensation Scheme for
Directors”), in light of recent trends in the share price, etc.

25

(4) Amendments to the maximum amount of compensation and number of shares for medium- to long-term
performance-based compensation (stock-based compensation B)
Before amendment
Maximum amount of stock-based compensation B:
Up to ¥50,000 thousand per year
Maximum number of Allotted Shares:
Up to 20,000 shares per year

After amendment
Maximum amount of stock-based compensation B:
Up to ¥65,000 thousand per year
Maximum number of Allotted Shares:
Up to 45,000 shares per year

[Reasons for the amendments to this item] The Company will amend the maximum amount of money to be contributed by theCompany under this scheme in order to further enhance motivation to contribute to the degree of achievement of managementtargets, the degree of enhancement of corporate value, and the like, by further increasing the proportion of stock-based
compensation as an incentive, based on a level of compensation for Eligible Directors that is competitive in the market. In
addition, the Company will also amend the maximum number of shares to be granted to Eligible Directors (the definition of the“Allotted Shares” is as shown in “3. Details of Compensation Related to the Restricted Stock-Based Compensation Scheme for
Directors”), in light of recent trends in the share price, etc.

2. Outline of Policy on Decisions Related to the Compensation of Directors
The content of this policy on decisions shall take effect subject to each proposal related to amendments to the
Articles of Incorporation and officer compensation being resolved at the Annual General Meeting of
Shareholders for the fiscal year ended December 2023, to be held on March 27, 2024, after resolution at themeeting of the Board of Directors held on February 14, 2024.
(1) Basic policy
To provide compensation that enables the Company to appoint as Directors the finest persons who practicethe corporate mission and contribute to the achievement of short-term performance targets, achievement of
medium- to long-term performance targets, and continuous enhancement of corporate value.
At the Company, we will create a compensation system that is highly transparent, fair, and reasonable toensure accountability to our stakeholders.
(2) Compensation composition
Compensation for Directors (excluding Directors who are Audit and Supervisory Committee Members andOutside Directors) is comprised of basic compensation, which is fixed compensation, and single-fiscalyear performance-based compensation and medium- to long-term performance-based compensation,
which vary depending on performance, while balancing the elements listed in the above basic policy.
Compensation for Directors who are Audit and Supervisory Committee Members and Outside Directors iscomprised of only basic compensation, from the perspective of their role and independence.
The compensation structure ratio of each performance-based compensation to basic compensation for
Directors (excluding Directors who are Audit and Supervisory Committee Members and Outside
Directors) will be determined in accordance with the category of the officers.
(3) Basic compensation
Basic compensation, which is fixed compensation, will be paid monthly to Directors.
The amount of basic compensation for Directors (excluding Directors and Audit and Supervisory
Committee Members and Outside Directors) will be determined by taking into account the work duties
they are in charge of, scope of responsibility, years of service, degree of contribution to short-term andmedium- to long-term performance, degree of contribution to enhancement of corporate value, and thelike, as well as taking into consideration the level of other companies in the same industry.
The amount of basic compensation for Directors who are Audit and Supervisory Committee Members andOutside Directors will be determined by taking into consideration the work responsibilities and the level ofother companies.
(4) Single-fiscal-year performance-based compensation
Single-fiscal-year performance-based compensation (cash bonuses and stock-based compensation A) is
linked to the degree of achievement of the management target, the degree of enhancement of corporate
value, and the like, for a single fiscal year and the amount of compensation is determined based on the
Company’s performance results and the like for a single year, and the determined amount of compensation
26

will be paid to the Eligible Directors in the form of cash bonuses and restricted stock (stock-based
compensation A) after the results of each fiscal year are fixed.
Single-fiscal-year performance-based compensation for each Eligible Director is composed of a cash
bonus, representing half of such compensation, and stock-based compensation A, representing half of suchcompensation.
As indicators of consolidated business performance, the rate of increase in the share price and the amountof consolidated net income excluding Frontier Capital Inc. shall be the basic indicators, and the amount of
single-fiscal-year performance-based compensation to be paid to Eligible Directors is determined in lightof: i) the degree of contribution to performance; and ii) the maximum amount of compensation for the
Eligible Directors, and the like.
An outline of the details of single-fiscal-year performance-based compensation (stock-based compensationA) are provided in “3. Details of Compensation Related to the Restricted Stock-Based Compensation
Scheme for Directors.”(5) Medium- to long-term performance-based compensation
Medium- to long-term performance-based compensation (stock-based compensation B) is linked to thedegree of achievement of the management target for the medium-term management plan, the degree ofenhancement of corporate value, and the like, and restricted stock (stock-based compensation B) will bedelivered to the Eligible Directors at the beginning of each fiscal year based on the compensation baseamount in accordance with their position. In principle, after the end of the period falling under the
medium-term management plan, the number of shares with respect to which the transfer restriction is lifted
will be determined, regarding such shares granted during such period, in accordance with the degree ofachievement of the management target for the medium-term management plan, the degree of enhancementof corporate value, and the like.
The management target indicators for the medium-term management plan from 2024 to 2026 include thelevel of achievement of the rate of increase in the share price, the amount of consolidated net income
excluding Frontier Capital Inc., and consolidated ROE excluding Frontier Capital Inc. If a new mediumterm management plan is formulated in the future, these management target indicators could potentially bechanged by a resolution of the Board of Directors.
An outline of the details of medium- to long-term performance-based compensation (stock-based
compensation B) are provided in “3. Details of Compensation Related to the Restricted Stock-Based
Compensation Scheme for Directors.”(6) Compensation governanceCompensation for Directors (basic compensation, single-fiscal-year performance-based compensation andmedium- to long-term performance-based compensation) will be determined by a resolution of the Boardof Directors in light of voluntary deliberations and reports by the Nomination and Compensation Advisory
Committee.
Clawback provisions are set out to the effect that if a certain event such as material accounting fraud, ahuge amount of loss, or the like occurs, all or part of stock-based compensation A and stock-based
compensation B that has already been paid will be returned without any consideration in accordance witheach officer’s liability.
3. Details of Compensation Related to the Restricted Stock-Based Compensation Scheme for Directors
Under this scheme, every fiscal year, in principle, the Company will issue or dispose of common stock of theCompany to Eligible Directors, without requiring the payment of money or property contributed in kind, andit will permit the Eligible Directors to hold this common stock.
The Company will enter into a restricted stock allotment agreement (the “Allotment Agreement”) with the
Eligible Directors. During a certain period established in the Allotment Agreement (the “transfer restriction
period”), Eligible Directors will not be able to freely transfer, create security rights on, or otherwise dispose(“transfer, etc.”) the shares delivered based on the Allotment Agreement (the “Allotted Shares”) (hereinafter,these restrictions on transfer, etc., are referred to as the “transfer restrictions”).

27

Stock-based compensation A

Stock-based compensation B(1) Timing of delivery and methodof calculating the number ofshares to be delivered

The amount of compensation will be
determined based on the actual performanceof the Company for a single fiscal year, etc.,
and part of the amount of compensation thathas been determined will be paid to the
Eligible Directors in the form of restricted
stock, after the results of each fiscal year are
fixed.

Restricted stock will be allotted to the
Eligible Directors at the beginning of eachfiscal year based on the compensation baseamount in accordance with their position.

(2) Maximum
amountofcompensation and number ofsharesMaximum amount of stock-based
compensation:

Maximum amount of stock-based
compensation:

Up to ¥130,000 thousand per year

Up to ¥65,000 thousand per year

Maximum number of Allotted Shares:

Maximum number of Allotted Shares:

Up to 90,000 shares per year

Up to 45,000 shares per year

Provided, however, that if a stock split or consolidation of shares is conducted in relation to
the common stock of the Company, or in other cases equivalent to these cases that require
adjustment to the total number of shares to be allotted, the total number of shares to be
allotted will be reasonably adjusted.
(3) Transfer restriction period

Transfer restrictions will be established for three years from the day on which Eligible
Directors receive delivery of the Allotted Shares, and during this period, Eligible Directors
may not transfer, etc., these shares.

(4) Basic principle concerning thelifting of transfer restrictions

In principle, transfer restrictions will be
lifted when the transfer restriction period
expires.

In principle, after the end of the period
falling under the medium-term management
plan, the number of shares with respect towhich the transfer restriction is lifted will be
determined, regarding such shares granted
during such period, in accordance with thedegree of achievement of the managementtarget for the medium-term management
plan, the degree of enhancement ofcorporate value, and the like, and thetransfer restrictions will be lifted when thetransfer restriction period expires.

If, before the expiration of the transfer
restriction period, an Eligible Director
retires due to expiration of the term ofoffice, death, or other justifiable reason, theCompany will lift transfer restrictions on all
shares granted to the relevant Eligible
Director, after reasonably adjusting thetiming of removing the transfer restrictions
as necessary.

If, before the expiration of the transfer
restriction period, an Eligible Director
retires due to expiration of the term ofoffice, death, or other justifiable reason, (i)where such retirement occurs during theperiod from the time of granting such sharesto the time prior to determining the numberof shares with respect to which the transfer
restriction will be removed, the number ofsuch shares with respect to which thetransfer restriction will be removed and thetiming of removing the transfer restriction
will be reasonably adjusted as necessary inaccordance with the degree of achievementof the management targets for the mediumterm management plan and the degree ofenhancement of corporate value as of thattime, and the like, and (ii) where such
retirement occurs during the period from thetime of determining the number of shares(5) Exceptional handling when a
Director retires(i) If a Director retires owing to
the expiration of his or her
term of office, death, or otherjustifiable reason

28

Stock-based compensation A

Stock-based compensation B
with respect to which the transfer restriction
will be removed to the time of expiration of
the transfer restriction period, the timing ofremoving the transfer restriction will bereasonably adjusted as necessary.

(ii) If a Director retires without ajustifiable reason

If, before the expiration of the transfer restriction period, an Eligible Director retires as
Director of the Company and it is not due to the expiration of the term of office or reason
recognized as justifiable by the Board of Directors of the Company, the Company willautomatically acquire all of the shares allotted to the relevant Eligible Director, without
consideration.

(6) Exceptional handling in theeventoforganizational
restructuring, etc.

If, during the transfer restriction period, amerger agreement in which the Company
will be the disappearing company, shareexchange agreement or share transfer plan inwhich the Company will become a wholly
owned subsidiary, or other matter related toorganizational restructuring, etc.,(“organizational restructuring agreement,etc.”) is approved at a General Meeting of
Shareholders of the Company (provided,
however, that this will be the Board of
Directors of the Company in cases whenapproval by the General Meeting of
Shareholders of the Company is not required
for the relevant organizational restructuringagreement, etc.), transfer restrictions will be
lifted from all of the shares granted to therelevant Directors, after reasonably
adjusting the timing of removing the transfer
restrictions as necessary.

(7) Other reasons for acquisition
without consideration

When the Company determines the number of shares from which to lift transfer restrictions,
it will automatically acquire any shares from which transfer restrictions will not be removed,
without consideration.

(8) Return of sharesconsideration

Clawback provisions will be set out in the Allotment Agreement to the effect that if a certain
event such as material accounting fraud, a huge amount of loss, or the like occurs, all or partof stock-based compensation that has already been paid will be returned without any
consideration in accordance with each officer’s liability.

without(9) Other details to be determinedby the Board of Directors

If, during the transfer restriction period, anorganizational restructuring agreement, etc.,
is approved at a General Meeting of
Shareholders of the Company (provided,
however, that this will be the Board of
Directors of the Company in cases whenapproval by the General Meeting of
Shareholders of the Company is not required
for the relevant organizational restructuringagreement, etc.), (i) where such approval isgiven during the period from the time of
granting such shares to the time prior todetermining the number of shares withrespect to which the transfer restriction will
be removed, the number of such shares withrespect to which the transfer restriction will
be removed and the timing of removing thetransfer restriction will be reasonably
adjusted as necessary in accordance with thedegree of achievement of the managementtargets for the medium-term management
plan and the degree of enhancement ofcorporate value as of that time, and the like,and (ii) where such approval is given during
the period from the time of determining thenumber of shares with respect to which thetransfer restriction will be removed to thetime of expiration of the transfer restriction
period, the timing of removing the transfer
restriction will be reasonably adjusted asnecessary.

The Board of Directors will determine other details and matters related to the managementof this scheme, in light of voluntary deliberations and reports by the Nomination andCompensation Advisory Committee.

29

Business Report(From January 1, 2023 to December 31, 2023)

I

Current Situation of the Group(1) Progress and results of operations
During the fiscal year under review (January 1, 2023 to December 31, 2023), in the Japanese economy, socialand economic activities were normalizing with the easing of the movement restrictions imposed amid the
COVID-19 pandemic, and the economy was recovering moderately due to improvements in consumer
spending and capital expenditure. On the other hand, the Japanese economy continued to face uncertainties
mainly due to price hikes caused chiefly by geopolitical risk, such as the Russia-Ukraine war and the situationin the Middle East, and the weaker yen, as well as downside risks to overseas economies as a result of global
monetary tightening.
In this management environment, the Group continued to focus on proposing and executing one-stop solutions
to issues faced by companies by providing comprehensive services that leverage management consulting,
M&A advisory, revitalization support, and other functions. Frontier Capital Inc., a consolidated subsidiary of
the Company that is in its second year since its establishment, procured funds of ¥3,000,600 thousand mainly
from financial institutions through a private placement of shares, then began business activities in earnest,
including concluding two investment agreements and executing investment in one of those projects.
As a result of the above, the Group reported consolidated net sales of ¥10,025,083 thousand (up 26.6% fromthe previous fiscal year), operating income of ¥1,251,629 thousand (up 37.8%), ordinary income of ¥1,238,574
thousand (up 34.4%), and net income attributable to owners of parent of ¥780,683 thousand (up 40.2%) for the
fiscal year under review.
Operating results by segment are as follows. Net sales include inter-segment sales.
(Consulting and Advisory Business Segment)
For the fiscal year under review, in the Consulting and Advisory Business segment, sales grew significantly in
the Revitalization Support Business, while the Management Consulting Business and the M&A Advisory
Business also performed well, with net sales of ¥10,003,683 thousand (up 26.4% from the previous fiscal year)
and operating income of ¥1,645,950 thousand (up 49.7%).
Results of operations by business are as follows.
Management Consulting Business
The business results of the Management Consulting Business for the fiscal year under review were ¥5,084,124
thousand (up 16.8% from the previous fiscal year) in net sales. In the fiscal year under review, sales increased
compared with the previous fiscal year. In addition to the effect of increased personnel resulting fromaggressive recruitment, the expansion of the consulting-related services, including strategic assistance inhelping manufacturers enhance their corporate value, SR/IR services, and DX services, contributed to suchincrease. In addition, there was an increase in orders from large companies.
M&A Advisory BusinessIn the M&A Advisory Business, net sales for the fiscal year under review were ¥3,023,043 thousand (up 8.2%
from the previous fiscal year). In the fiscal year under review, sales increased compared with the previous
fiscal year as a result of the successful completion of multiple large-scale M&A deals, including cross-border
M&A deals.
30Revitalization Support BusinessIn the Revitalization Support Business, net sales for the fiscal year under review were ¥1,648,476 thousand (up174.2% from the previous fiscal year). In the fiscal year under review, sales increased significantly comparedwith the previous fiscal year mainly due to a rise in the number of revitalization projects, as well as orders forlarge-scale revitalization projects and their execution.
Other Business
The business results of Other Business for the fiscal year under review were net sales of ¥248,038 thousand(up 49.4% from the previous fiscal year).
(Investment Business Segment)
During the fiscal year under review, Frontier Capital Inc. raised funds mainly from financial institutions
through a private placement of shares and began business activities in earnest, including executing investment
in its first investment project. However, the timing of investments slipped toward the end of the year, and theGroup incurred upfront personnel expenses and other fixed costs. As a result, net sales amounted to ¥42,646
thousand (up 142.3% from the previous fiscal year). The operating loss was ¥394,320 thousand (comparedwith an operating loss of ¥191,272 thousand in the previous fiscal year).
(2) Capital expenditure
The Group’s capital expenditure (tangible assets and intangible assets; excluding goodwill and customerrelated assets) for the fiscal year under review totaled ¥37,202 thousand, of which major items were equipment
installation at the head office of the Company and consolidated subsidiary Celebrain Corporation, as well as
furniture and fixtures, among others.
There was no selling or retirement of significant facilities during the fiscal year under review.
(3) Financing activities
During the fiscal year under review, the Group financed ¥500,000 thousand in short-term borrowings and¥1,000,000 thousand in long-term borrowings from a financial institution for business purposes.
(4) Transfer of business, absorption-type company split, and incorporation-type company split
Not applicable(5) Acquisition of business from other company
Not applicable(6) Succession of rights and obligations related to business of other entities through absorption-type merger orabsorption-type company split
Not applicable(7) Acquisition or disposal of other company’s shares, equities, or stock acquisition rights and the like
The Company acquired the shares of Athema (registered trade name: AT Conseil) on July 20, 2023 to make it
an affiliate accounted for by the equity method.
31

(8) Issues to address
The Group aims to be a global independent professional firm that supports the achievement of increases incorporate value by providing the optimal services tailored to the unique characteristics of our clients’businesses.
In order to achieve this vision, the Group has formulated a medium-term management plan covering the period
from the 18th fiscal year (fiscal year ending December 2024) to the 20th fiscal year (fiscal year ending
December 2026) of the Company, and will focus on the following initiatives as priority issues.
(i) Consulting and Advisory Business
The Group will focus on solutions that strengthen and nurture the ability of client companies to create
value from their management resources.
Priority strategies are as follows.
a)

Fully integrated support for the formulation of strategies related to business portfolios, M&A
execution, and PMIb)Hands-on support for digitalization and improvement of productivity by customersc)Provision of a complete range of full-spec support functions for revitalization contracts, includingplan formulation, hands-on support, investment, and CxO dispatchd)Strengthen customer global competitiveness through fully integrated support for mid-cap crossborder M&A and PMIe)Support for senior management team formation and senior management human resource
development to oversee future growth, in accordance with management strategy(ii) Investment Business
The Group will engage in the Investment Business in earnest, and create new funds with various
investment policies.
Priority strategies are as follows.
a)Strengthen the Investment Business to enhance participation in achieving resultsb)

Frontier Capital Inc. will begin investment in core regional companies in earnest and achieve
dramatic growth at investee companies, while also contributing to expanding the scale of the Groupby executing consolidated investments.

c)

Establishment of new funds (revitalization fund, venture capital fund, etc.)(iii) Organizational strengthening
The Group will work to achieve quantitative expansion and productivity improvements through active
hiring, as well as discontinuous growth through M&A.
a)

Increase by 200 people in three years (non-consolidated basis). Diversify hiring methods and balance
quantitative expansion with efficiency enhancementsb)Enhancement of our knowledge database and significant improvements to operational productivity
through generative AI and operations BPO (business process outsourcing)c)Active engagement in M&A and alliances with companies with which synergies are expected32

(9) Assets and profit and loss(i)

Changes in the Group’s assets and profit and loss
The 14th Fiscal
Year (FY2020)

The 15th Fiscal
Year (FY2021)

The 16th Fiscal
Year (FY2022)

The 17th Fiscal
Year (the fiscal
year underreview)(FY2023)(Thousands of yen)

5,192,527

5,741,654

7,915,655

10,025,083

Ordinary income(Thousands of yen)

575,633

514,576

921,5111,238,574

Net income attributable toowners of parent(Thousands of yen)

420,515

338,707556,722780,683

Net income per share

(Yen)

36.89

29.70

48.67

67.51

Net assets(Thousands of yen)

2,448,598

2,454,066

3,015,956

6,822,364

Total assets(Thousands of yen)

3,792,731

3,819,274

5,658,644

10,874,682

Category

Fiscal year

Net sales(ii) Changes in the Company’s assets and profit and loss
The 14th Fiscal
Year (FY2020)

The 15th Fiscal
Year (FY2021)

The 16th Fiscal
Year (FY2022)

The 17th Fiscal
Year (the fiscal
year underreview)(FY2023)(Thousands of yen)

5,188,593

5,732,196

7,546,117

9,557,654

Ordinary income(Thousands of yen)

556,817513,057

1,081,609

1,625,830

Net income(Thousands of yen)

413,157

345,454754,497

1,191,958

Net income per share

(Yen)

36.24

30.29

65.96

103.08

Net assets(Thousands of yen)

2,414,569

2,429,387

3,136,089

4,348,730

Total assets(Thousands of yen)

3,759,798

3,800,171

5,646,614

8,166,955

Category

Fiscal year

Net sales

Note:

The Company conducted a 2-for-1 common stock split on January 1, 2021. Net income per share was calculated
assuming that these stock splits were effected at the beginning of the 14th Fiscal Year (FY2020).

33

(10)

Significant subsidiaries
Company namePaid-in capital(thousands of yen)

Voting rights ratio (%)

Frontier Management(Shanghai) Inc.

120,000

100.00Celebrain Corporation

64,50060.36

Frontier Capital Inc.

2,000,300

91.00

(11)

Description of business
Management Consulting Business
M&A advisory business
Management Consulting Business
Other Business
Investment business that involves thedispatch of management personnel

Principal businesses (as of December 31, 2023)

The Group’s businesses consist of two segments: Consulting and Advisory Business and Investment Business.
The main business content of each segment is as follows.
Business segment

Description of business

Consulting and Advisory Business

Management Consulting Business
M&A Advisory Business
Revitalization Support Business

Investment Business

Investment business that involves the dispatch of management
personnel(12)Major offices (as of December 31, 2023)

・The Company
Head office3-2-1 Roppongi, Minato-ku, Tokyo, Japan

Osaka Branch

3-3-13 Imabashi, Chuo-ku, Osaka City, Osaka, Japan

Nagoya Branch

2-45-14 Meieki, Nakamura-ku, Nagoya City, Aichi, Japan

Fukuoka Branch

2-5-19 Hakataeki Higashi, Hakata-ku, Fukuoka City, Fukuoka, Japan

Singapore Branch

Republic of Singapore

New York Branch

United States of America

・Subsidiaries
Frontier Management (Shanghai) Inc.

People’s Republic of China

Celebrain Corporation

3-4-4 Akasaka, Minato-ku, Tokyo

Frontier Capital Inc.

3-2-1 Roppongi, Minato-ku, Tokyo, Japan

34

(13)

Employees (as of December 31, 2023)(i)

Employees of the Group
Segment name

Number of employees

Change from the end of the previous
fiscal year

Consulting and Advisory Business

356

32 (increase)

Investment Business

13

2 (increase)369

34 (increase)

Total
Notes: 1.
2.

The number of employees represents the number of the Group’s full-time staff members (excluding seconded persons
from the Group to companies outside the Group) and does not include the number of part-time employees, contract
employees, temporary employees, etc.
The 32-person increase in the number of employees of the Consulting and Advisory Business from the end of theprevious fiscal year is due to aggressive recruitment.

(ii) Employees of the Company
Number of employees

Change from the end of theprevious fiscal year
328

Note:

(14)

Average age

24 (increase)

Average years of service

37.5 years old

Principal lenders (as of December 31, 2023)
LenderLoan amount (millions of yen)

Sumitomo Mitsui Banking Corporation(15)

3.1 years

The number of employees represents the number of the Company’s full-time staff members (excluding seconded persons
from the Company to other companies) and does not include the number of part-time employees, contract employees,
temporary employees, etc.

1,588

Material information related to the current situation of the corporate group other than the above

Not applicable35

II Shares of the Company (as of December 31, 2023)(1) Total number of shares issuable:

45,648,000(2) Total number of shares issued:

11,718,554 (excluding 7,903 shares of treasury stock)(3) Number of shareholders:

3,736(4) Major shareholders (top 10)
Number of shares owned(shares)Name of shareholders

Shareholding ratio (%)

Shoichiro Onishi

2,179,458

18.60

Masahiro Matsuoka

2,179,458

18.60

Custody Bank of Japan, Ltd. (Trust Account)

878,200

7.49

The Master Trust Bank of Japan, Ltd. (Trust Account)

657,300

5.61

Masaya Yajima

614,880

5.25

Takahiro Yamaguchi

503,200

4.29

Tomohiro Murata

258,500

2.21

ANTEMA

223,900

1.91

BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)

216,630

1.85

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
153,800
Note:
Shareholding ratio is calculated excluding the number of shares of treasury stock (7,903 shares).

1.31(5) Shares delivered to officers as consideration for the execution of duties during the fiscal year under review
Number of shares (shares)
Directors (excluding Outside Directors)

Number of persons towhom shares weredelivered (persons)

19,9994(6) Other material information related to the Company shares(i) Stock option(s)The total number of shares issued increased by 14,080 due to the exercise of stock options.
(ii) Shares subject to transfer restriction
At its Board of Directors’ meeting held on March 24, 2023, the Company resolved to issue new shares, andissued 19,999 new shares on April 14, 2023 in order to grant shares subject to a transfer restriction to four
Directors (excluding Outside Directors).

36

III Company Officers(1) Directors and Audit & Supervisory Board Members
Name

Position and responsibility

Significant concurrent positions outside the Company

Representative
Director

Co-President and Executive
OfficerMember of the Nomination
and Compensation Advisory
Committee
Chairperson of the Risk
Management Committee

Representative Director, President, CEO and COO of
Frontier Capital Inc.
Representative Director of FCD Partners Inc.
Outside Director of Tokyo Electric Power Company
Holdings, Incorporated

Representative
Director

Co-President and Executive
OfficerMember of the Nomination
and Compensation Advisory
Committee
Member of the Risk
Management Committee
Chairperson of the
Sustainability Promotion
Committee

Representative Director of Frontier Capital Inc.
Director of Celebrain Corporation
Chairman of Frontier Management (Shanghai) Inc.
Representative Director of FCD Partners Inc.
Representative Director and Chairman of ORENO
Corporation
Outside Director of RIZAP GROUP, Inc.

Tadaaki Komori

Director

Deputy President andExecutive Officer
Head of M&A Advisory
Business
General Manager ofMarketing Department

Masao Nishihara

Director

Shoichiro Onishi

Masahiro Matsuoka

Kazuhito Osugi

Director

Keiko Unotoro

DirectorTakeshi Umemoto

Full-time Audit& Supervisory
Board Member

Kazuhiko Shimokobe

Audit &
Supervisory
Board Member

Chairperson of theNomination andCompensation Advisory
Committee

Independent Outside Director of the Board of Nissha
Co., Ltd.
Outside Director of The Gunma Bank, Ltd.

Member of the Nomination
and Compensation Advisory
Committee

Outside Director of SAN-AI OBBLI CO., LTD.
Outside Director of OHBA CO., LTD.
Commissioner of Public Security Examination
Commission
Auditor of Tokyo Metropolitan Public University
Corporation

Member of the Nomination
and Compensation Advisory
Committee

Outside Auditor of Industrial Growth Platform, Inc.

Representative Director of Probity Consulting Co.,Ltd.
Part-time Lecturer at Graduate School of Asian andInternational Business Strategy of Asia University
External Director of MODEC, Inc.
Audit &
Hiroko Noda
Supervisory
Outside Director (Audit and Supervisory Committee
Board Member
Member) of Okabe Co., Ltd.
Substitute Audit & Supervisory Board Member of
Pigeon Corporation
Outside Director of S.T. CORPORATION
Outside Director of CHORI CO., LTD.
Notes: 1. Directors Kazuhito Osugi and Keiko Unotoro are Outside Directors as stipulated in Article 2, item (xv) of theCompanies Act.
2. Audit & Supervisory Board Members Takeshi Umemoto, Kazuhiko Shimokobe, and Hiroko Noda are Outside Audit &Supervisory Board Members as stipulated in Article 2, item (xvi) of the Companies Act.
3. The Company has designated Kazuhito Osugi and Keiko Unotoro, who are Directors of the Company, and Takeshi
Umemoto, Kazuhiko Shimokobe and Hiroko Noda, who are Audit & Supervisory Board Members of the Company, as

37

4.
5.

independent officers based on the provisions of the Tokyo Stock Exchange, and has submitted notification to theexchange.
Takeshi Umemoto, full-time Audit & Supervisory Board Member, has been in charge of audits for many years andpossesses considerable knowledge in finance and accounting. Hiroko Noda, Audit & Supervisory Board Member, is a
corporate manager and certified public accountant and possesses considerable knowledge in finance and accounting.
On December 31, 2023, Nobumichi Hattori, Audit & Supervisory Board Member, retired from his position owing to his
resignation, and Hiroko Noda, who was elected as Substitute Audit & Supervisory Board Member at the 16th Annual
General Meeting of Shareholders of the Company held on March 24, 2023, assumed office as an Audit & Supervisory
Board Member on the same day.
Furthermore, Audit & Supervisory Board Member(s) who retired during the fiscal year under review are as follows.
Name

Date of retirement

Reason for
retirement

Responsibility and significant concurrent positions
outside the Company at the time of retirement
Audit & Supervisory Board Member/Member of theNomination and Compensation Advisory Committee
External Director of FAST RETAILING CO., LTD.

Nobumichi
Hattori6.

December 31, 2023

Resignation

Outside Director of Hakuhodo DY Holdings Inc.
Visiting Professor of Graduate School of Business andFinance of Waseda University

Visiting Professor of Graduate School of Business
Administration of Keio University
Furthermore, Nobumichi Hattori possessed considerable knowledge in finance and accounting, having worked at aleading U.S. investment bank.
Director Masahiro Matsuoka resigned from his position as Representative Director on February 14, 2024, and will retire
as Director owing to the expiration of his term of office at the conclusion of the 17th Annual General Meeting of
Shareholders of the Company to be held on March 27, 2024.

(2) Amount of compensation, etc. for Directors and Audit & Supervisory Board Members(i) Total amount of compensation, etc. paid during the fiscal year under review
Total amount of compensation, etc. by category(thousands of yen)

Category

Total amountMedium- tooflong-termSingle-fiscal-year performanceNumber ofcompensation,
performancebased compensation
target officers
etc.
based
Basic
(persons)(Thousands of compensationcompensationyen)
Stock-based
Stock-based
Cash bonuses compensation compensation
A
B

Directors

253,621

195,000

38,00019,000

1,621

6(Of whom, outside
officers)(17,600)(17,600)

(–)

(–)

(–)

(2)

30,45030,450–––4(30,450)(30,450)

(–)

(–)

(–)

(4)

284,071

225,450

38,00019,000

1,621

10

Audit &
Supervisory Board
Members(Of whom, outside
officers)
Total(Of whom, outside(48,050)(48,050)
(–)
(–)
(–)
(6)
officers)
Notes: 1. The total amount of compensation for Directors does not include salary paid as an employee to Directors
concurrently serving as an employee.
2. The above includes one Audit & Supervisory Board Member who resigned on December 31, 2023.

(ii) Matters relating to resolution of general meeting of shareholders for compensation, etc. for Directors
and Audit & Supervisory Board Members
The Annual General Meeting of Shareholders held on March 24, 2022 passed a resolution for setting
monetary compensation for the Company’s Directors (including its Outside Directors) at ¥400,000
thousand or less per year (including ¥25,000 thousand or less per year for Outside Directors, excluding38

employee salaries for Directors concurrently serving as employees). The number of Directors (including
two Outside Directors) at the conclusion of said General Meeting of Shareholders was five.
The Annual General Meeting of Shareholders held on March 25, 2021 passed a resolution for stockbased compensation for the Company’s Directors, excluding Outside Directors, separately from theaforementioned monetary compensation: (i) the total value and total number of shares of the Company’scommon stock to be issued or disposed of as stock-based compensation A linked to single-year
consolidated business performance shall be ¥100,000 thousand or less per year and 40,000 shares or lessper year, respectively; and (ii) the total value and total number of shares of the Company’s common
stock to be issued or disposed of as stock-based compensation B linked to an achievement rate against
medium-term business plan targets and the extent of improvement of its corporate value shall be¥50,000 thousand or less per year and 20,000 shares or less per year, respectively. The number of
Directors (excluding Outside Directors) at the conclusion of said General Meeting of Shareholders wasthree.
The total amount of compensation for the Audit & Supervisory Board Members was decided by aresolution at the Extraordinary General Meeting of Shareholders held on August 14, 2018 to be ¥50,000
thousand or less per year. The number of Audit & Supervisory Board Members at the conclusion of said
General Meeting of Shareholders was three.
(iii)

Policy for determining the details of compensation for officers

A) How to decide the policy for determining the details of compensation for individual Directors
The policy for determining the details of compensation for the Company’s individual Directors was
resolved by the Board of Directors meeting held on February 9, 2021 in light of voluntary
deliberations and reports by the Nomination and Compensation Advisory Committee.
The Board of Directors judged the compensation for individual Directors for the fiscal year underreview to be consistent with the policy since the Board checked that: i) the determined details of thecompensation and the method for determining them were consistent with the determination policy
resolved by the Board; and ii) the details were determined by the Board of Directors within a rangeof total compensation amount resolved beforehand by a general meeting of shareholders in light ofvoluntary deliberations by the Nomination and Compensation Advisory Committee and its
recommendation.
B) Description of the policy for determining the details of compensation for individual Directors
・ Basic policy
To provide compensation that enables the Company to appoint as Directors the finest persons
who practice the corporate mission and contribute to the achievement of short-term performancetargets, achievement of medium- to long-term performance targets, and continuous
enhancement of corporate value.
At the Company, we will create a compensation system that is highly transparent, fair, andreasonable to ensure accountability to our stakeholders.
・ Compensation composition
Compensation for Directors (excluding Outside Directors) is comprised of basic compensation,
which is fixed compensation, and single-fiscal-year performance-based compensation andmedium- to long-term performance-based compensation, which vary depending on
performance, while balancing the elements listed in the above basic policy.
Compensation for Outside Directors is comprised of only basic compensation, from theperspective of their role and independence.
The compensation composition ratio of each performance-based compensation to basic
compensation for Directors (excluding Outside Directors) will be determined in accordancewith the category of the officers.
・ Basic compensation
Basic compensation, which is fixed compensation, will be paid monthly to Directors.

39

The amount of basic compensation for Directors (excluding Outside Directors) will be
determined by taking into account the work duties they are in charge of, scope of responsibility,
years of service, degree of contribution to short-term and medium- to long-term performance,
degree of contribution to enhancement of corporate value, and the like, as well as taking into
consideration the level of other companies in the same industry. The amount of basic
compensation for Outside Directors will be determined by taking into consideration the work
responsibilities and the level of other companies.
・ Single-fiscal-year performance-based compensation
Single-fiscal-year performance-based compensation (cash bonuses and stock-based
compensation A) is linked to consolidated results for a single fiscal year and the amount ofcompensation is determined based on the Company’s performance results and the like for asingle year, and the determined amount of compensation will be paid to Directors (excluding
Outside Directors; “Eligible Directors”) in the form of cash bonuses and restricted stock (stockbased compensation A) after the results of each fiscal year are fixed.
The maximum amount of single-fiscal-year performance-based compensation (total amount tobe paid to all Eligible Directors) is the smaller of one-third of an amount in excess of targeted
operating income, or a total amount of 18-month basic compensation for the Representative
Directors and nine-month basic compensation for Eligible Directors (excluding Representative
Directors).
The amount of single-fiscal-year performance-based compensation to be paid to Eligible
Directors is determined in light of: i) the degree of contribution to performance in relation to an
amount in excess of targeted operating income; and ii) the maximum amount of compensation
for the Eligible Directors, and the like.
The composition ratio of single-fiscal-year performance-based compensation for each Eligible
Director is composed of a cash bonus, representing two-thirds of such compensation, and stockbased compensation A, representing one-third of such compensation.
We chose the performance indicator because operating income, representing income fromprincipal business activities, is an evaluation metric that reflects results very directly.
Shown below are the target for the indicator for single-fiscal-year performance-based
compensation and the actual amount for the fiscal year under review.
TargetConsolidated operating income¥1,200 million

Actual amount¥1,251 million

・ Medium- to long-term performance-based compensation
Medium- to long-term performance-based compensation (stock-based compensation B) is
linked to the degree of achievement of the management target for the medium-term
management plan, the degree of enhancement of corporate value, and the like, and restricted
stock (stock-based compensation B) will be delivered to the Eligible Directors at the beginningof each fiscal year based on the compensation base amount in accordance with their position.
In principle, after the end of the period falling under the medium-term management plan, thenumber of shares with respect to which the transfer restriction is lifted will be determined,
regarding such shares granted during such period, in accordance with the degree of achievementof the management target for the medium-term management plan, the degree of enhancement ofcorporate value, and the like.
The performance indicators for the medium-term management plan from 2021 to 2023 include
the level of achievement of consolidated net sales, consolidated operating margin, consolidated
ROE and ESG/SDGs.
We chose these performance indicators because we thought it appropriate to consider themexhaustively in order to reflect the Company’s performance in Directors’ compensation in a
multi-faceted manner while attaching importance to growth potential and profitability in light ofthe purpose of the performance-based compensation scheme, namely to further contribute toraising our corporate value in the medium to long term. This was after linking this type of40

compensation to business targets specified in the medium-term management plan as it is linked
to performance for the plan.
Shown below are the targets for the indicators for medium- to long-term performance-based
compensation.
TargetConsolidated net sales

Evaluation ratio¥8,700 million

30%

20%

30%

At least 20%

30%

Items shown in the medium-term
management plan

10%

Consolidated operating margin
Consolidated ROE
ESG/SDGs

Shown below are the actual amounts for the indicators for medium- to long-term performancebased compensation.
Level ofachievement

Actual amount
Consolidated net sales¥10,025 million

115.2%

Consolidated operating margin

12.5%

62.4%

Consolidated ROE

23.6%

117.8%–

50.0%

ESG/SDGs

・ Compensation governanceCompensation for Directors (basic compensation, single-fiscal-year performance-based
compensation and medium- to long-term performance-based compensation) will be determinedby a resolution of the Board of Directors in light of voluntary deliberations and reports by the
Nomination and Compensation Advisory Committee.
Clawback provisions are set out to the effect that if a certain event such as material accounting
fraud, a huge amount of loss, or the like occurs, all or part of stock-based compensation A andstock-based compensation B that has already been paid will be returned without any
consideration in accordance with each officer’s liability.
(3) Outside Directors and Outside Audit & Supervisory Board Members(i) Significant concurrent positions outside the Company as a business executor of other corporations, etc.
and relevant relationship between the Company and the other corporations, etc.
Not applicable(ii) Significant concurrent positions outside the Company as an outside officer of other corporations, etc.
and relevant relationship between the Company and the other corporations, etc.
Kazuhito Osugi, Director concurrently serves as Independent Outside Director of the Board of Nissha
Co., Ltd. and Outside Director of The Gunma Bank, Ltd., but there is no special relationship between
the Company and these companies.
Keiko Unotoro, Director concurrently serves in the following posts: Outside Director of SAN-AI
OBBLI CO., LTD., Outside Director of OHBA CO., LTD., Commissioner of Public Security
Examination Commission, and Auditor of Tokyo Metropolitan Public University Corporation.
However, there is no special relationship between the Company and these organizations.
Kazuhiko Shimokobe, Audit & Supervisory Board Member concurrently serves as Outside Auditor ofIndustrial Growth Platform, Inc., but there is no special relationship between the Company and thecorporation.
Hiroko Noda, Audit & Supervisory Board Member concurrently serves as Representative Director of
Probity Consulting Co., Ltd., Part-time Lecturer at Graduate School of Asian and International
Business Strategy of Asia University, External Director of MODEC, Inc., Outside Director (Audit and41

Supervisory Committee Member) of Okabe Co., Ltd., Substitute Audit & Supervisory Board Memberof Pigeon Corporation, Outside Director of S.T. CORPORATION, and Outside Director of CHORI
CO., LTD. However, there is no special relationship between the Company and these organizations.

42

(iii) Main activities in the fiscal year under review
Category

Director

Name

Kazuhito Osugi

Director

Keiko Unotoro

Full-time Audit
Takeshi& Supervisory
UmemotoBoard Member

Audit &
Supervisory
Board Member

Audit &
Supervisory
Board Member

Notes: 1.
2.

Kazuhiko
Shimokobe

Nobumichi
Hattori

Attendance atBoard ofDirectors
meetings

Attendance at
Audit &
Supervisory
Board meetings

Outline of main activities and duties executed inrelation to roles expected–

Kazuhito Osugi has been continuing to give diverse
statements actively at Board of Directors meetings,
provide advice on the management of the Company
and each department, and oversee its businessexecution appropriately from an objective andspecialized perspective by tapping into the in-depth
knowledge in economy, finance, and business
revitalization that he accumulated through serving in
key posts at the Bank of Japan and Industrial
Revitalization Corporation of Japan. In his capacity
as Chairperson of the Nomination and Compensation
Advisory Committee, he led deliberations on thepolicy for election of officers and determination of
the details of Directors’ compensation.

–

Keiko Unotoro has been continuing to make diverse
statements actively at Board of Directors meetings,
provide advice on the management of the Company
and each department, and oversee its businessexecution appropriately from an objective andspecialized perspective by tapping into the in-depth
knowledge in economic laws, competition policies,and corporate compliance that she accumulated
through serving in key posts at the Fair Trade
Commission. Further, she led deliberations on thedesired direction of the Company and its Board of
Directors in risk management and sustainability.

15/15

Takeshi Umemoto has been conducting audits froman impartial and objective perspective by using his
experience in audit operations to lead the Audit &Supervisory Board and giving necessary statements
as appropriate from primarily a financial andaccounting perspective at Board of Directors
meetings and Audit & Supervisory Board meetings.
In addition, he has been providing advice andsuggestions in the deliberations to ensure thereasonableness and appropriateness of businessexecution.

15/15

Kazuhiko Shimokobe has been conducting audits
from an impartial and objective perspective by using
his experience of engaging in many corporate
revitalization projects as an attorney to makenecessary statements as appropriate at Board of
Directors meetings and Audit & Supervisory Board
meetings. In addition, he has been providing advice
and suggestions in the deliberations to ensure thereasonableness and appropriateness of businessexecution.

14/15

Nobumichi Hattori has been conducting audits froman impartial and objective perspective by using his
experience at a leading U.S. investment bank as wellas his knowledge in business administration as auniversity professor to make necessary statements asappropriate at Board of Directors meetings andAudit & Supervisory Board meetings. In addition, he
has been providing advice and suggestions in the
deliberations to ensure the reasonableness andappropriateness of business execution.

14/14

14/14

14/14

14/14

13/14

Excluding the number of Board of Directors meetings for written resolution.
Hiroko Noda, Audit & Supervisory Board Member, is omitted from the above table because she assumed her
position on December 31, 2023.

43

(iv) Summary of details of limited liability agreement
Pursuant to the provisions of Article 427, paragraph (1) of the Companies Act, the Company hasentered into limited liability agreements with Outside Directors and Outside Audit & Supervisory
Board Members to limit their liability for damages under Article 423, paragraph (1) of the Companies
Act.
Pursuant to such agreements, the defined maximum amount of liability for damages is the minimum
liability amount provided for under Article 425, paragraph (1) of the Companies Act with regard toboth Outside Directors and Outside Audit & Supervisory Board Members.
(v) Outline of directors and officers liability insurance policy
The Company has entered into a directors and officers liability insurance policy as provided for in
Article 430-3, paragraph (1) of the Companies Act with an insurance company, thereby covering losses
that may arise from a Director or an Audit & Supervisory Board Member, an insured person, assuming
liability incurred in the course of the performance of duties or receiving claims pertaining to the
pursuit of such liability. All of Directors and Audit & Supervisory Board Members will be included as
the insured of the said insurance policy, and the Company bears insurance premiums for all the insured
persons in full.

44

Consolidated Balance Sheet(As of December 31, 2023)(Thousands of yen)
AssetsItem
Current assets

Liabilities
AmountItem

Amount8,159,931

Current liabilities

2,569,015

Cash and deposits

5,838,745

Accounts payable

111,549

Notes and accounts receivable, and contract
assets1,494,319

Current portion of long-term borrowings

237,313

Operational investment securities

516,904

Accounts payable-other

183,039

Other

325,208

Income taxes payable421,277

Allowance for doubtful accounts(15,247)

Provision for bonuses

994,085

Provision for officers’ bonuses

43,555

Fixed assets

2,709,108

Tangible assets

282,287

Provision for shareholder benefit program

25,849Buildings

252,933

Other

552,345

Tools, furniture, and fixtures

29,353Long-term liabilities

1,483,303

Intangible assets

259,814Long-term borrowings

Software

10,222

Asset retirement obligations

Goodwill

235,671

Customer-related assets

12,500Other
Investments and other assets
Investment securities
Stocks of subsidiaries and affiliates
Investments in capital of subsidiaries andassociates

1,352,000

Total liabilities

131,303
4,052,318

Net assets

1,420

Shareholders’ equity

3,699,747

2,167,006

Paid-in Capital

374,743

296

Capital surplus

734,019

Retained earnings

2,599,348

1,301,800
1,963

Treasury stock(8,363)

Lease deposits

355,817

Deferred tax assets

419,285

Other

87,842

Share award rights

Deferred assets

5,642

Stock acquisition right

37,130Organization expenses

5,642

Non-controlling interests

3,065,287

Total net assets

6,822,364

Total liabilities and net assets

10,874,682

Total assets
Note:

Other accumulated comprehensive income
Foreign currency translation adjustment

10,874,682

The amounts stated in the Balance Sheet are rounded down to the nearest thousand yen.

45

1,198
1,198
19,000Consolidated Statement of Income(From January 1, 2023 to December 31, 2023)(Thousands of yen)
Item

AmountNet sales

10,025,083

Cost of sales

4,497,697

Gross profit

5,527,385

Selling, general and administrative expenses

4,275,756

Operating income

1,251,629

Non-operating income
Interest income

135

Equity in earnings of affiliates

4,053

Insurance dividend income

2,130Gain on forfeiture of unclaimed dividends

1,467

Foreign exchange gains

1,013

Other

1,785

10,586

Non-operating expenses
Interest expense

11,403

Share issuance costs

11,908

Other

330

Ordinary income

23,642
1,238,574

Extraordinary income
Gain on sale of investment securities

1,675

Income before income taxes

1,675
1,240,249

Income taxes

521,059

Income taxes-deferred(73,091)

447,968

Net income

792,280

Net income attributable to non-controlling interests

11,597

Net income attributable to owners of parent

780,683

Note:

The amounts stated in the Statement of Income are rounded down to the nearest thousand yen.

46

Non-consolidated Balance Sheet(As of December 31, 2023)(Thousands of yen)
AssetsItem
Current assets

Liabilities
AmountItem

Amount4,395,133

Current liabilities

2,342,271

Cash and deposits

2,749,769

Accounts payable

95,347

Notes and accounts receivable, andcontract assets

1,431,469

Current portion of long-term borrowings

236,000

Operational investment securities

23,713

Accounts payable-other141,139

Prepaid expenses

153,128

Accrued expenses

170,204

Advances paid

33,627

Contract liabilities

27,648Other

18,218Deposits received

66,075

Allowance for doubtful accounts(14,793)

Fixed assets

3,771,822

Income taxes payable

389,650

Accrued consumption taxes

207,834

Tangible assets

259,259

Provision for bonuses

943,550

Buildings

233,454

Provision for officers’ bonuses

38,000Tools, furniture, and fixtures

25,804

Provision for shareholder benefit program

25,849Intangible assets

10,171Other

Software

10,069Other

102

Investments and other assets

3,502,391

Stocks of subsidiaries and affiliates

2,633,106970

Long-term liabilities

1,475,953

Long-term borrowings

1,352,000

Asset retirement obligations
Total liabilities

123,953
3,818,224

Investments in capital of subsidiaries andassociates

2,500

Long-term loans receivable fromsubsidiaries and associates

15,000Shareholders’ equity

4,292,599

Long-term accounts receivable - other

20,601

Paid-in Capital

374,743

Lease deposits

330,744

Capital surplus

733,119

Deferred tax assets

416,651

Capital reserve374,743

Other investments, etc.

87,842Other capital surplus

Allowance for doubtful accounts(4,055)Retained earnings

Total assets
Note:

Net assets

8,166,955

Other retained earnings

3,193,100

Retained earnings brought forward

3,193,100

Treasury stock(8,363)

Share award rights

19,000Stock acquisition right

37,130Total net assets

4,348,730

Total liabilities and net assets

8,166,955

The amounts stated in the Balance Sheet are rounded down to the nearest thousand yen.

47

358,375
3,193,100

Non-consolidated Statement of Income(From January 1, 2023 to December 31, 2023)(Thousands of yen)
Item

AmountNet sales

9,557,654

Cost of sales

4,205,485

Gross profit

5,352,168

Selling, general and administrative expenses

3,722,946

Operating income

1,629,221

Non-operating income
Interest income

116

Insurance dividend income

2,130

Administrative fees received

5,747

Gain on forfeiture of unclaimed dividends

1,467

Other

529

9,991

Non-operating expenses
Interest expense

11,358

Share issuance costs

1,406

Other

617

Ordinary income

13,382
1,625,830

Extraordinary income
Gain on sale of investment securities

1,675

1,675

1,307

1,307

Extraordinary loss
Provision of allowance for doubtful accounts for subsidiaries andassociates
Income before income taxes

1,626,198

Income taxes

503,322

Income taxes-deferred(69,082)

Net income
Note:434,239
1,191,958

The amounts stated in the Statement of Income are rounded down to the nearest thousand yen.

48

Audit & Supervisory Board’s Audit Report
Audit Report
The Audit & Supervisory Board, upon deliberation, prepared this audit report regarding the executionof duties of the Directors during the 17th Fiscal Year from January 1, 2023 to December 31, 2023,
based on the audit reports prepared by each Audit & Supervisory Board Member and hereby reports asfollows:
Auditing Method Employed by Audit & Supervisory Board Members and the Audit & Supervisory
Board and Details Thereof(1) The Audit & Supervisory Board, having established an auditing policy and audit plan including
division of duties, received from each Audit & Supervisory Board Member reports on the executionof audits and results thereof, and in addition, received from the Directors and Accounting Auditor
reports on the execution of their duties and sought explanations as necessary.
(2) In compliance with the auditing standards for corporate audits established by the Audit &Supervisory Board, and in accordance with the auditing policy and division of duties, each Audit &Supervisory Board Member has communicated with the Directors, employees of the Internal Audit
Department and other relevant personnel, collected information, improved the audit environment,
and conducted audits using the following methods, while making use of media such as the phone
and the Internet.
(i) We attended the Board of Directors meetings and other important meetings, received reports
from the Directors, employees, and other relevant personnel regarding the execution of theirduties, sought explanations as necessary, inspected important internal approval documents, andexamined the operations and assets of the Company at the Head Office. We also communicatedand exchanged information with the Directors and Audit & Supervisory Board Members of thesubsidiaries, and received business reports from the subsidiaries as necessary.
(ii) We regularly received reports from the Directors and personnel in the internal audit division andother relevant departments, sought their explanations as necessary, and expressed our opinionswith respect to the development and operation status of systems that are necessary to ensure thatthe execution of duties by the Directors stated in the Business Report complies with laws andregulations and with the Company’s Articles of Incorporation; and other systems (internal
control system), which have been developed in compliance with resolutions from the Board of
Directors prescribed by Article 100, paragraphs (1) and (3) of the Ordinance for Enforcement of
the Companies Act of Japan as systems necessary to ensure the properness of business
operations of a corporate group comprising a stock company and its subsidiaries.
(iii) We also monitored and examined whether the Accounting Auditor maintains its independence
and implement appropriate audits, received reports from the Accounting Auditor on theexecution of their duties, and sought explanations as necessary. We also received notificationfrom the Accounting Auditor that the “System for ensuring that duties are performed properly”(as enumerated in each Item of Article 131 of the Regulation on Corporate Accounting) havebeen established in accordance with the Quality Control Standards for Audits (BusinessAccounting Council, October 28, 2005) and other relevant standards and sought explanations asnecessary.
1.

Based on the foregoing method, we reviewed the Business Report for the fiscal year under review, its
supplementary data, and Non-consolidated Financial Statements (Non-consolidated Balance Sheets,
Non-consolidated Statements of Income, Non-consolidated Statements of Shareholders’ Equity, andnotes to the Non-consolidated Financial Statements), as well as its supplementary data andConsolidated Financial Statements (Consolidated Balance Sheets, Consolidated Statements of Income,Consolidated Statements of Shareholders’ Equity, and notes to the Consolidated Financial Statements).

49

2. Audit results(1) Audit results on the Business Report, etc.
(i) In our opinion, the Business Report and supplementary data fairly represent the Company’s

condition in conformity with the applicable laws and regulations as well as the Articles ofIncorporation of the Company.
(ii) We have found no evidence of misconduct or material facts in violation of the applicable laws
and regulations or the Articles of Incorporation of the Company in the course of the execution ofduties of the Directors.
(iii) In our opinion, the content of the resolutions of the Board of Directors regarding the internal
control systems is appropriate. Furthermore, we have found no matters to be pointed out inregard to the contents of the Business Report and the execution of duties by the Directors
regarding the internal control systems.
(2) Audit results of the Non-consolidated Financial Statements and Supplementary Data

In our opinion, the method and results of the audit employed and rendered by KPMG AZSA LLC,
the Accounting Auditor, are fair and reasonable.
(3) Audit results of the Consolidated Financial Statements

In our opinion, the method and results of the audit employed and rendered by KPMG AZSA LLC,
the Accounting Auditor, are fair and reasonable.
February 21, 2024
Audit & Supervisory Board
Frontier Management Inc.
Full-time Audit & Supervisory Board Member Takeshi Umemoto
Audit & Supervisory Board Member
Kazuhiko Shimokobe
Audit & Supervisory Board Member
Hiroko Noda
Note: Takeshi Umemoto, Audit & Supervisory Board Member, Kazuhiko Shimokobe, Audit &Supervisory Board Member, and Hiroko Noda, Audit & Supervisory Board Member, areOutside Audit & Supervisory Board Members as stipulated in Article 2, item (xvi) and
Article 335, paragraph (3) of the Companies Act.

50