Integrated Report 2022
Introduction

Updating Our Philosophy

Messages from Management

Corporate GovernanceCorporate Governance

50

Stakeholder Engagement 04
Message from an Outside Director

55

Value Creation Process for “10X”

Strategy & Performance

Sustainability

Corporate Governance

Company Overview

49Integrated Report 2022
Introduction

Updating Our Philosophy

Messages from Management

Value Creation Process for “10X”

Strategy & Performance

Sustainability

Corporate Governance

Company Overview

50

Corporate Governance

Progress of Governance Reforms
The Group has been progressing with governancereforms since around 2015. The three-year period
between 2015 and 2017 was the promotion phrase
where we implemented various policies to improvegovernance and introduced new systems. From 2018,
we have been striving to improve the application andoperation of systems introduced in order to build an
effective governance structure that is not a mere formality.
Measures implemented from 2015 onwards toimprove governance• Systematization of governance for greater
effectiveness• Introduction of effectiveness evaluation toenhance the functioning of the Board of Directors• Establishment of the Financial Results andDisclosures Committee and the CSR Committee• Abolition of anti-takeover measures• Establishment of Group Risk Management
Committee• Creation of Corporate Governance Guidelines• Introduction of Performance-Linked Stock
Compensation Plan for Directors and Officers• Separation of execution and monitoring
through the introduction of an
entrustment-type executive system• Outside directors become the majority of theBoard of Directors

Changes in composition of directors/auditors
Internal directors/auditors

Number ofdirectors/auditors

Composition ofthe Board ofDirectors

Outside directors/auditors

2013

2014

2015

2017

2018

2021

2022

1111121011

911Of which
2 females

Of which
1 female

Of which
1 femaleComposition ofthe Board ofCompanyAuditors

Appointment of outside directors (2014 onwards)
Appointment of female directors (2013 onwards)(Note 1) As at the end of the General Meetings of Shareholders in each year.
Only years where there were changes in the composition of the Board of Directors are listed.
(Note 2) As of December 2022, representative director Koki Sato is the only director with executive duties.

Of which
2 females

Integrated Report 2022
Introduction

Updating Our Philosophy

Messages from Management

Value Creation Process for “10X”

Strategy & Performance

Sustainability

Corporate Governance

51

Company Overview

Corporate Governance

Basic approach tocorporate governanceThe corporate governance of the Company is based on
the development and operation of a system to ensurethat actions are based on the company’s corporate
philosophy and decisions are made in a transparent, fair,and efficient manner, and compliance with laws andregulations and appropriate supervision (monitoring) ofcorporate performance are carried out under the missionof “To inspire the world with entrepreneurship.”Governance Highlights (FY2022/9)
Directors:

7*

Outside Directors, as of December 2022. It determines
matters prescribed by laws and regulations and theArticles of Incorporation and matters concerning theexecution of important business and oversees theexecution of business. Furthermore, as part ofstrengthening of its corporate governance system, theCompany introduced an executive officer system inJanuary 2017. Under this system, the authority formaking decisions and executing business operation isdelegated to Executive Officers to the extent permitted
by relevant laws and regulations, in order for the Boardof Directors to mainly focus on the oversight (monitoring)of the Group Executive Officers who are responsible forthe execution of business (monitoring model-oriented).

The outline ofcorporate governance structure

OutsideDirectorsFemaleDirectors52

The Group is managed under a holding company
structure in which the Company is a holding company
and its group companies are operating companies. By
separating the function of administering its overallbusiness from executing its individual businesses, theGroup has been working to facilitate the delegation ofauthority and strengthen the Company’s function ofmonitoring the Group’s businesses.
The Board of Directors shall consist of a majority, at
the minimum, of highly independent Outside Directors.
The Board consists of seven Directors, five of whom are
Corporate Governance System (as of December 2022)
Outside Directors/Auditors

Directors/Auditors

General Meetings of Shareholders
Appoint and dismiss

Appoint and dismiss

Operations
audit

Board of Directors

Board ofDirectors’Meetings Held:

Auditors:

4*

Average AttendanceRate of Directors

Attendance
14 Average
100 %Rate of Auditors

OutsideAuditors

3*As of December 2022

100 %Board ofAuditors’Meetings Held:
Average
AttendanceRate of Auditors:

Group Risk
Management Committee
ReportRequest forinvestigation

Whistleblower
hotline1498 %

AdviseNotify and report

ReportCoordinateCoordinate
Requestfor advice
ReportSustainability Committee

Group President and Chief Executive Officer
Report andconsult

AdviseBoard of Auditors

Nomination AdvisoryCommittee

Financial Results andDisclosures Committee

Appoint and supervise

Requestfor advice

Appoint and dismiss

Coordinate
ReportInternal Auditing
OfficeGroup Executive Officer (Group Management Meeting)Group companies and departments(Note) Please refer to the link below for an overview of the corporate governance system.
https://www.septeni-holdings.co.jp/en/company/governance.html

Accounting
Auditors

Internal audit

Accounting audit

Integrated Report 2022
IntroductionUpdating Our Philosophy

Messages from Management

Value Creation Process for “10X”

Strategy & Performance

Sustainability

Corporate Governance

Company Overview

52

Corporate Governance

Board of Directors
The Group Executive Officers are responsible for theexecution of business of the Company, that of thebusiness companies in its group or that across several
business companies. The Board of Directors appoints
Group Executive Officers in charge of respective areas ofbusiness operation, and the Group President and Chief
Executive Officer who concurrently serves as
Representative Director oversees the execution ofbusiness operations by the Group Executive Officers.
Moreover, matters to be resolved by meetings of theBoard of Directors, those regarding which authority is tobe delegated to the Group Executive Officers and thoseto be reported by the Group Executive Officers to theCompany’s Board of Directors are clearly stipulated in
the regulations of the Board of Directors.
Group Management Meetings
Group Management Meeting has been established, as asystem regarding decision-making on the execution ofbusiness, with the functions of supporting decision-making
by the Group President and Chief Executive Officer and ofconsidering important managerial matters of the group.
Board of Auditors
The Company has adopted a company auditor system.
Under the system, there are currently four Company
Auditors including three highly independent OutsideAuditors. Each Company Auditor audits the execution ofbusiness by the Directors, in accordance with the auditing
policy, audit plans and so forth determined by the Boardof Company Auditors.
Committees
The Company has established a Group Risk Management
Committee that supervises risk management of the group,a Sustainability Committee that promotes sustainability
activities to enhance the corporate value and a Financial

Results and Disclosures Committee that reviews andevaluates financial results information, information fortimely disclosure, among other things. In doing so, theCompany has put in place a system that clarifies authority
and responsibilities and enables prompt and appropriate
decision-making. On the other hand, Nomination Advisory
Committee, the majority of which consists of Outside
Directors, has been established as an optional committeeof the Board of Directors to handle personnel mattersregarding the group’s management team (appointment,removal etc. of Directors of the Company, Group Executive
Officers and others), in order to ensure the independence,
objectivity and accountability of the deliberation process.
Executive Sessions
Meetings attended only by the Outside Directors(Executive Session) are held once a month in principle,
thereby securing a place for information exchange andshared awareness from objective standpoints. Outside
Auditors, external accounting auditors and otherindependent outside persons may attend such meetings,
thereby providing a place for promoting cooperation
among independent outside persons.

Composition of Committees, etc.

Business Continuity Criteria

Sustainability
Committee

Nomination
Advisory
Committee

ExecutiveSession

Major Agenda Items at the Board ofDirectors Meetings
Major agenda items in FY2022/9(from October 2021 to September 2022)(excluding regularly scheduled agenda items)
Deepening Capital and Business Alliance with the Dentsu Group
Establishment of Sustainability Committee
Revision of Board of Directors Regular Meeting Agenda
Revision of Group Management Meetings Regulations
Revision of Corporate Governance Guideline
Asset Allocation and Business Portfolio

M&AAgenda of Executive Training Session

Koki Sato

Impact of the Situation in Ukraine

Etsuko Okajima

Investment in Kamiyama Marugoto College ofTechnology Scholarship Fund

Yusuke Asakura
Yoshiki Ishikawa

Change in Fiscal Year-End
Partial Amendment to Articles of Incorporation

Akie Iriyama

Partial Amendments to Share Handling Regulations

Mio Takaoka

Revision of Group Philosophy

Shuji Yamaguchi

Revision of HR System

Integrated Report 2022
Introduction

Updating Our Philosophy

Messages from Management

Value Creation Process for “10X”

Strategy & Performance

Sustainability

Corporate Governance

Company Overview

53

Corporate Governance

Officer compensation plan
In the fiscal year ended September 2017, the Group
introduced a new compensation plan (a board incentive
plan (BIP) trust) to more clearly define the relationshipbetween the remuneration of the Company’s directors(excluding outside directors and non-residents of Japan)
and executive officers (excluding non-residents of Japan;
collectively, “Directors, etc.”) and the Group’s businessresults in the medium-to-long term as well as theCompany’s shareholder value, while creating a soundincentive to enhance business results and corporate value
in the medium-to-long term. As a result, remuneration for

directors of the Company consists of monthly
compensation and stock compensation, and remunerationfor outside directors who are independent from businessexecution consists of monthly compensation only.
BIP TrustThis is a performance-linked stock compensation planthat aims to establish a clearer relationship between
remuneration for Directors, etc. and the value of theGroup’s stock. The Company’s shares are purchased fromthe market as officer compensation, kept in a trust accountand delivered in accordance with the recipient’s positionand degree of achievement of the performance targets
in the Midterm Business Policies.

Director and Auditor Remuneration
Total amount of remunerations, etc. by type
CategoryDirectors(of whom Outside Directors)

Number ofpayees

8(5)Total amount of officers’
remunerations, etc.

228,228 thousand yen(69,000 thousand yen)

Basic remuneration

196,440 thousand yen(69,000 thousand yen)

Performance-linked
remuneration, etc.

Risk management
In order to recognize significant events that may affect theGroup’s business management, to identify, analyze andassess risks that may harm the growth and developmentof the business and to make responses to the risks such asaversion, mitigation, transfer and others, the Group shallestablish the “Group Risk Management Regulations.” In
addition, it set up the “Group Risk ManagementCommittee” as a body to oversee and manage such risks
in an integrated and effective manner under the common
policy as the Group. It constructs the PDCA cycle of risk
management operations and promotes risk management in
the Group as a whole to achieve sustainable development.
In the fiscal year ended September 2022, among therisks common to our entire group, we selected thefollowing as priority risks to be addressed, taking into
account social trends.

Non-monetary
remuneration, etc.
31,788 thousand yen(–)

Priority Risks
Information leakage risks
Security risks
Management insufficiency risk

Company Auditors(of whom Outside Auditors)

4(3)27,000 thousand yen(24,000 thousand yen)

27,000 thousand yen(24,000 thousand yen)

(Note) Please refer to the link below for supplementary information on remuneration of Directors and Auditors.
https://www.septeni-holdings.co.jp/en/company/governance.html#directors-compensation–(–)

Integrated Report 2022
Introduction

Updating Our Philosophy

Messages from Management

Value Creation Process for “10X”

Strategy & Performance

Sustainability

Corporate Governance

Company Overview

54

Corporate GovernanceEvaluation of the effectiveness of
the Board of Directors
With the aim of enhancing the function of the Board ofDirectors, the Company conducts analysis, evaluationand follow-up examinations of issues on the effectivenessof the Board of Directors once a year in principle. TheCompany also conducts large-scale and detailed surveys
by external third-party institutions once every 3 years. In
the fiscal year 2022, based on the advice of an external
third-party organization, the Company conducted aquestionnaire survey of all directors and company
auditors, and interviewed directors.
As a result, it was confirmed that the Board of Directors
has completed the transition to a Board of Directors(Monitoring Board) centered on outside directors, and has
been able to engage in highly sophisticated and lively
discussions. In addition, in terms of operation, practicalmeasures such as devising the agenda of the Board ofDirectors, providing materials in advance, creating
opportunities for discussions through camps, andstrengthening cooperation among outside directors
through executive sessions have already been sufficiently
carried out, and that effectiveness has been confirmed.
On the other hand, it was confirmed that with thesubstantial reform of the Board of Directors, a common
awareness of issues, such as how to think of the innovation
board, which lies ahead of the monitoring board, how torealize the “co-creation of value between supervision andexecution,” and how to think of the succession of theBoard of Directors, has emerged. Going forward, theCompany will advance initiatives to further enhance theeffectiveness of the Board of Directors, while taking into
account the awareness of these issues.

Policy on measures to protect
minority shareholders in
conducting transactions with
controlling shareholder
The Company’s parent company is Dentsu Group Inc.
One of the Company’s directors concurrently serves as anexecutive officer of Dentsu Japan Network of the Dentsu
Group Inc. and an executive officer of Dentsu Inc., asubsidiary of Dentsu Group Inc. However, this director is ina position to supervise the execution of business in orderto enhance its corporate value as a non-executive directorof the Company. In addition, with respect to transactions
with the parent company, management support fees aredetermined by agreements between the parties taking
into account the content of operations, and interest rates
on fund transactions are determined in the same manneras in general transactions with reference to market interestrates. Through these various measures, the Company
believes that its business operations are sufficiently
independent from the parent company, etc. As a publicly
traded company with the parent company, the Company
has agreed to maintain its autonomy and independence inthe relationship with the parent company under anagreement between the parties. In addition, the majorityof the Company’s Board of Directors is independent
outside directors, and decisions concerning its management
are made through discussions based on the viewpoint ofprotecting minority shareholders. As a result, theCompany does not anticipate any harm to the interestsof itself or its minority shareholders.

Governance since the Capital andBusiness Alliance with the Dentsu Group

Appointment of Directors andMember Structure• One director and one auditor (part-time auditor)
will be appointed by Dentsu Group Inc.
• Even after the capital and business alliance, themajority of our directors shall be independent
outside directors, and our representative director
shall be a director who is not an outside director
and who is not appointed by Dentsu Group Inc.

Cooperation in Management Autonomyand Maintaining Listing• Even after the execution of various transactions
associated with the capital and business alliance,
the Dentsu Group shall respect our autonomy, act
in such a manner as not to violate the delisting
standards to maintain our listing, and cooperatewith us to a reasonable extent.

Handling of Shares• Dentsu Group Inc. will not acquire any additional
shares of our stock without obtaining our priorwritten approval.

Integrated Report 2022
Introduction

Updating Our Philosophy

Messages from Management

Value Creation Process for “10X”

Strategy & Performance

Sustainability

Corporate Governance

Company Overview

55

Stakeholder Engagement 04

Message from an Outside Director

Etsuko Okajima

Outside Director

The Board of Directors’ long-term vision
for the Septeni GroupThe discussion at the executive training session last
fiscal year about the Septeni Group’s fundamental
long-term corporate value brought up key concepts
ranging from technology that empowers people andtechnology that enables data-driven organizational
development to a business structure linking 2B and 2C,
combining art and science, emotional management,
emotional intelligence, and nameraka* relationshipbetween our people and organization.
The Septeni Group boldly delegates authority overbusiness execution to Group Executive Officers, and theBoard of Directors discusses medium- and long-term
strategic issues in areas related to the above concepts.
*The Japanese word nameraka means a harmonious state without friction
and barriers.

The Septeni Group’s pursuit ofa nameraka future
Septeni maintains an excellent balance of “credibilityand independence” among its board members bycomplementing the regular Board of Director meetings
with executive sessions for exclusive discussions
between the outside directors and outside corporate
auditors and an annual executive training session. The
directors each contribute their expertise andknowledge, and some of the discussions have beenquite heated, such as when we talked about the balanceof long-term investment in human capital and thepursuit of short-term performance targets or discussed
the business portfolio strategy. The discussions often
progress well beyond what I’ve experienced at othercompanies, and there are many examples where thethoroughness of a discussion dovetailed into a
nameraka path to the solution. I truly believe the level ofeffectiveness of the Board of Directors is unparalleled.
One of the items on the board’s discussion agenda
was the Group vision, which we revised and thenadopted in fiscal 2022. Creative input was provided
from various perspectives, such as about what the ideal
system of philosophy should be and whether thewording was emotionally appealing to eachstakeholder. We talked in depth about the kind ofworldview that we should have and the kind of value
the Company should be providing to the people,organizations, and society that are our stakeholders. I
believe those discussions are what led to a new visionthat each board member can truly get enthusiasticabout. I also think that this is another example Septeni’s
co-creation, with the Board of Directors itself

demonstrating it, and also an example of progressive
corporate leadership with an innovation-oriented boardthat leads to growth in new directions.

The Septeni Group Board ofDirectors’ view of the future
As the Group has progressed through growth stages,
the Board of Directors has gone through anevolutionary process from a board focused on
management to focuses on providing advisory andmonitoring functions. As we look to the future, theboard will have to become even more advanced so it
can develop and lead with an innovative mindset. Our
Board of Directors consists of a majority of outside
directors who are management professionals withdiverse expertise and experience. Even analyzing theboard’s personality matrix using the Company’s Five
Factors & Stress (FFS) theory that is incorporated into its
AI-based personnel system, the board members havean extremely good balance for both risk management
and creating the Septeni Group’s future.
The Septeni Group Board of Directors is accelerating
efforts to achieve its 10X growth plan by actively working
to improve its ability to apply its collective intelligencefor co-creation and to make swift and timely decisions.
We intend to further update our core competencies so
we can formulate a well-balanced portfolio strategy, use
technologies to continue refining our data-driven
organizational capabilities, and develop a robust risk
management system to support our business endeavors.
We appreciate your support as we seek to engage inconstructive dialogue with all of our stakeholders.