Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Corporate Governance
Basic Views on Corporate Governance
MHC recognizes that one of its social responsibilities is to ensure transparent and sound management while emphasizing
initiatives to achieve sustainable corporate growth and a medium- to long-term improvement in corporate value. Respecting
the rights and interests of all of its stakeholders, including shareholders, customers, local communities, and employees MHC
works to fulfill the trust they place in us and aspires to contribute to a more prosperous society.
To fulfill these social responsibilities, it engages in continuous initiatives to enhance corporate governance by boosting the activity of the Board of Directors, reinforcing the Audit & Supervisory Committee and the internal audit system,
ensuring timely and appropriate disclosures of information, improving investor relations (IR), and related activities.
Basic policies
Appropriate collaboration with all stakeholders
In accordance with MHCʼs “Vision,” which guides all ofMHCʼs activities, and the “Mitsubishi HC Capital Group
Code of Ethics and Code of Conduct,” which serves as
the standard for the decisions and behaviors of all
employees, MHC strives to ensure appropriate collaboration with its various stakeholders, including shareholders, customers, local communities, and employees.
In addition, MHC strives to foster a corporate culture that encourages respect for the diversity of its
stakeholders, their rights and perspectives, and soundcorporate ethics.
Appropriate information disclosure andensuring transparency
MHC strives to conduct proactive and continuous information disclosure in order to be trusted and properly
evaluated by each of its stakeholders. It also establishes
and appropriately operates internal systems to facilitate
the swift and impartial disclosure of accurate information
regarding its management policies, business strategies,
business activities, financial condition, etc.
In addition to the items it is required to disclose
pursuant to laws and regulations, it actively and voluntarily discloses non-financial information deemed useful
to its stakeholders.

tively, including furnishing the necessary environment for
the exercise of such rights, and gives consideration to
the fair treatment of all shareholders, including minority
shareholders and foreign shareholders.
Dialogue with shareholders
Through events such as financial results briefings andother domestic and overseas investor relations (IR)events, MHC pursues proactive and constructive dialogue with shareholders. It thereby seeks to gain anunderstanding from shareholders regarding matters suchas its business strategies while responding to the shareholders in an appropriate manner based on an understanding of their perspectives.
Responsibilities of the Board of Directors
All members of the Board of Directors, including Outside
Directors, call upon their experience and insight as they
engage in free and open discussions, contributing toactive proceedings of the meetings of the Board of
Directors. In this manner, they adequately fulfill theirduties and responsibilities to achieve the sustainablegrowth of MHC, medium- to long-term improvement of
its corporate value, and enhancement of its earnings
capacity and capital efficiency in an environment that
supports appropriate risk-taking.

Ensuring the rights and equality of shareholders
MHC takes appropriate steps to ensure that the rights ofshareholders are secured and can be exercised effec-

Corporate Governance Systems (As of October 1, 2023)
General Meeting of Shareholders
Appointment/Dismissal

Important
DecisionMaking Audit &Supervisory
Function

Corporate Governance System and Its Characteristics

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Matters concerning execution of duty
As a company with an audit & supervisory committee,
MHC delegates many execution of duty decisions to the
Executive Committee, a body that will deliberate anddecide on important management matters, and expedites the decision-making process, with the aim ofstrengthening the supervisory functions of the Board of
Directors. In addition, MHC has adopted an executive
officer system, in order to further enhance and invigorate
the functions of the Board of Directors by clarifying the
responsibilities related to the execution of duty.
The Executive Committee, a body that will deliberate and decide on important management matters, iscomposed of the President & CEO, Deputy President,
and Executive Officers separately specified by the
President & CEO. The Committee will hold deliberations
and make decisions on important matters, including thebusiness management of the Group, in addition to
conducting preliminary considerations of matters thatare to be submitted to the Board of Directors to facilitate
decision-making by the Board of Directors.

Governance Committee, Nomination Committee, andCompensation Committee
The Governance Committee widely exchanges opinions on
enhancing the effectiveness of the Board of Directors andother matters concerning the Board of Directors and continues working to enhance the soundness, transparency, andfairness of the Companyʼs management.
The Nomination Committee discusses the appointment of Directors, the succession plan for the
Representative Director, President & CEO, knowledge,
experience, skills, etc. that the Directors should have,and other matters.
The Compensation Committee regularly monitors
the Directorsʼ remuneration system of MHC in comparison with the market standard by using an external specialized agency and discusses policies concerning theGovernanceCommittee
Nomination
Committee
Compensation
Committee

AdviceBoard ofDirectors

ReportingConsultation
ReportingAppointment/Dismissal
Audit/
Supervising

Audit &
Supervisory
Committee

Directors

Appointment/Dismissal

ReportingAccounting
AuditorDirectors who are Audit & Supervisory Committee Members

Consultation

Appointment/Dismissal; Delegation and Supervision of Execution of Duty

The Company transitioned into a company with an audit & supervisory committee to enhance the fairness and transparency of management, strengthen the supervisory functions of the Board of Directors, and enhance corporate governance. The Board of Directors is chaired by a non-executive Chairman. In addition, to further enhance its corporate
governance, the Company has established the Nomination Committee and the Compensation Committee, of which
Independent Outside Directors comprise the majority, as advisory bodies to the Board of Directors related to the nomination of the President, remuneration for Directors, and other matters. The Company has also established theGovernance Committee, which consists of Outside Directors, Representative Directors, and others, as an organizationthat gives the Board of Directors advice related to matters including improvement of its effectiveness.

systems, standards, etc., for Directorsʼ remuneration.
The members and the chairperson of the Nomination
Committee and Compensation Committee shall beselected by the Board of Directors, and items discussed in
the committees shall be resolved by a majority of committee members in attendance. It is stipulated in internal rulesthat the Board of Directors shall make decisions in recognition of to decisions made by the committees.

Board of Directors and Audit & Supervisory Committee
The Company implements a system to manage andoperate business in line with the basic policy decided by
the Board of Directors. Each Outside Director has qualities appropriate for their position, giving the Board of
Directors a set of diversified and sufficient skills.
The Audit & Supervisory Committee consists of one
Full-time Audit & Supervisory Committee Member andthree Part-time (outside) Audit & Supervisory Committee
Members. The Companyʼs Audit & Supervisory
Committee Members have extensive knowledge offinancial business, and a system is in place to ensure thefull effectiveness of accounting audits.

Proposal/ReportingInstruction

Reporting

Cooperation

Accounting Audit

Risk Management Committee
Compliance Committee
ALM Committee

Execution of
Duty
Function

Disclosure Committee

Executive
Committee

Reporting

ReportingPresident & CEO

Consultation

Instruction/
Supervising

Sustainability Committee
IT Committee

Internal
Audit Division

Instruction/
Supervising

Proposal/Reporting

Audit

Execution of Duty Division
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Introduction

Composition of the Board of Directors
Views on the appropriate balance of knowledge,
experience and skills, diversity, and size of the Boardof Directors as a whole
MHC assumes that the Board of Directors shall possess
skills in “general corporate management”, “financing”,“treasury accounting”, “legal, compliance and risk management”, “international business”, and other areas, inview of the business lineup. MHC recognizes that diversityof Directors is important for the purposes of strengthening
the function of the Board of Directors and that gender,
nationality, and race are factors that should be considered.
On the other hand, MHC believes that it is not necessarily desirable, for purposes of strengthening the functionsof the Board of Directors, to elect a Director with a certain
attribute merely to comply with formal and external diversity
requirements even when they lack the qualities and abilities
that are required for the role. Therefore, MHC believes, as adesirable way of achieving diversity within MHC, that it isnecessary to consider whether such a Director is expected
to perform the necessary skills and possesses the ability inlight of the respective management environment as a toppriority and electing a desirable person without restrictions
on gender, nationality, race, age, career, etc. Based on sucha view, MHC will continue to determine the appropriatecomposition of the Board of Directors.
Currently, it assumes that MHCʼs Board of Directors
consists of Directors from a variety of business categories and industries and has an appropriate number ofmembers to ensure a balanced composition of appropriate skills and diversity.
MHC has currently elected two female Directors
while no foreign Directors have been elected. However,
MHC acknowledges that the Board of Directors has
been performing a sufficient supervisory function, as it
has elected several Directors who possess a wealth ofinternational business experience and has received
valuable opinions on global business development.

Ratio ofnon-executive directors

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Composition of the Board of Directors and Reasons for Appointment and Expertise of Each Director
Training Policy for Directors and Audit & Supervisory
Committee Members
The Company explains its corporate philosophy, financial conditions, matters related to corporate governance,and other matters to newly appointed Outside Directors
upon their appointment. In addition, after they take officeas Directors, the Company provides them with information on training opportunities, including seminars held byexternal organizations on the latest trends in corporate
governance, DX, sustainability, and other topics.
Further, Outside Directors cooperate by exchanging
and sharing various information via the GovernanceCommittee, which is an advisory body to the Board of
Directors, and opinion exchange sessions, in which only
Outside Directors participate.
The Company bears the full cost related to thetraining of Directors.

Candidateʼs
Name

Takahiro Yanai

Taiju Hisai

Kanji Nishiura

Kazumi Anei

Haruhiko Sato

Hiroyasu Nakata

Ratio of outside directors

42%

Areas of Expertise (Note)
Title

Yuri Sasaki

Reasons for Appointment and Expected RoleManagement Finance Treasury Legal Global

Director, Chairman

Since 2017, Mr. Takahiro Yanai has served as the President & CEO of Mitsubishi UFJ
Lease & Finance Company Limited based on a wealth of management experience at amajor Japanese financial institution. He has a wealth of management experience as thechief of execution of duty leading the management of the Company as it expands globally.
By using deep knowledge based on his experience, he has been in charge of supervisionof management as a non-Executive Director, Chairman since April 2023. We have deemed
him to be the best candidate to aim for further improvement of the soundness of the
management of the Company and enhancement of corporate value over the medium tolong term. We are therefore reappointing him as a candidate for Director.

Representative
Director,
President & CEO

Since 2021, Mr. Taiju Hisai has served as the Deputy President and an Executive Officer of
the Company and has led the overall business of the Company based on a wealth ofmanagement experience at a major Japanese financial institution. He has served as theRepresentative Director, President & CEO, and an Executive Officer acting as the chief ofexecution of duty since April 2023. He has sufficient experience and knowledge toassume business management of the Company as it expands globally. We have deemed
him to be the best candidate to take command of business as the Representative
Director, President & CEO, and an Executive Officer and to aim for the Companyʼssustainable growth and improvement of corporate value over the medium to long term.
We are therefore reappointing him as a candidate for Director.

Representative
Director, Deputy
President

Since 2021, Mr. Kanji Nishiura has served as the Representative Director, Deputy
President, and Executive Officer of the Company. With his wealth of management
experience at a major Japanese general trading company, he has managed the overall
operations to assist the President. He has sufficient experience and knowledge to assume
business management of the Company as it expands globally. We expect him tocontribute to the Companyʼs sustainable growth and improvement of corporate value overthe medium to long term as an Executive Director and are therefore reappointing him as a
candidate for Director.

Director, Deputy
President

Mr. Kazumi Anei has served as an Executive Officer and the Chief Marketing Officer ofHitachi Capital Corporation since 2016 and 2020, respectively, and since 2021, he has led
the overall business of the Company as the Director, Deputy President, and an Executive
Officer of the Company. He has sufficient experience and knowledge to assume business
management of the Company as it expands globally. We expect him to contribute to theCompanyʼs sustainable growth and improvement of corporate value over the medium tolong term as an Executive Director and are therefore reappointing him as a candidate for
Director.

Director, Managing
Executive Officer

Mr. Haruhiko Sato currently assumes the positions of the Head of the Corporate &Strategic Planning Division and CFO, serving as the Director, Managing Executive Officerof the Company. He has a wealth of experience at a major Japanese general trading
company, as well as experience and knowledge in the corporate division, which he has
cultivated while engaged in the business management of the Company as it expands
globally. We expect him to utilize this background and contribute to the Companyʼssustainable growth and improvement of corporate value over the medium to long term as
an Executive Director. We are therefore reappointing him as a candidate for Director.

Director(Outside Director)(Independent
Director)

Mr. Hiroyasu Nakata has deep knowledge as a legal expert. He had contributed toappropriate decision making and supervision of overall management by the Board of
Directors as an independent Outside Director. We are therefore reappointing him as a
candidate for Director. We expect him to use his knowledge to contribute to appropriate
decision making and supervision of overall management by the Board of Directors as anindependent Outside Director from an objective perspective independent of executive
management responsible for the execution of duty and to contribute to the improvement of
the soundness, transparency, and fairness of the management of the Company as a memberof the Governance Committee, Nomination Committee and Compensation Committee.

Director(Outside Director)(Independent
Director)

Ms. Yuri Sasaki has academic knowledge as a university professor, as well as outstanding
insight and a wealth of experience as an international finance researcher. She contributed toappropriate decision making and supervision of overall management by the Board of
Directors as an independent Outside Director. We are therefore reappointing her as a
candidate for Director.
We expect her to use her knowledge and experience to contribute to appropriate decision
making and supervision of overall management by the Board of Directors as an independent
Outside Director from an objective perspective independent of executive management
responsible for the execution of duty and to contribute to the improvement of the soundness,transparency, and fairness of the management of the Company as a member of theGovernance Committee, Nomination Committee and Compensation Committee.

Ratio of female directors

17%
67%

Message from the
President & CEO(Note) The respective terms for the areas of expertise have the following meanings: “Management” for general corporate management; “Finance” for treasury;“Treasury” for finance and accounting; “Legal” for legal, compliance, and risk management, and; “Global” for global business.

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

76

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Status of Activities of the Board of Directors and each Committee
Candidateʼs
Name

Takuya Kuga

Areas of Expertise (Note)
Title

Reasons for Appointment and Expected RoleManagement Finance Treasury Legal Global

Director(Outside Director)

Mr. Takuya Kuga has a wealth of management experience at a major Japanese general
trading company, as well as a deep knowledge of Japanese and international businesses.
He has used his experience and knowledge from a practical perspective to contribute toappropriate decision making and supervision of overall management by the Board of Directors
as an Outside Director. We are therefore reappointing him as a candidate for Director.
As Mr. Kuga concurrently serves as the Executive Vice President of Mitsubishi
Corporation, a major shareholder of the Company, he is not designated as an
Independent Director. Mitsubishi Corporation is an important business partner for theCompany to work together with to aim for the improvement of corporate value.
Among other positions, including overseas assignments in the U.S., he had served as
Division COO, Real Estate Business Division and Division COO, Urban Infrastructure
Division. Currently, he assumes the position of the Group CEO, Urban Development
Group. We expect to utilize Mr. Kugaʼs management experience and extensive knowledgeof overall Japanese and international businesses for the Companyʼs management andeffectively utilize advice from him, who has served as a chief of business areas ofcollaboration between Mitsubishi Corporation and the Company. We deem that this willlead to the improvement of the Companyʼs corporate value and contribute to theenhancement of the interests of all shareholders, including minority shareholders.
Mr. Kuga has indicated his intention to perform his duties as a Director for the benefit of theCompany and not for any specific shareholder. If any item of business posing a conflict ofinterest between Mitsubishi Corporation and the Company is submitted to the Companyʼs
Board of Directors, he will participate in neither the resolutions nor the deliberations.
We expect him to use his knowledge to contribute to appropriate decision making andsupervision of overall management by the Board of Directors as an Outside Director andto contribute to the improvement of the soundness, transparency, and fairness of the
management of the Company as a member of the Governance Committee, Nomination
Committee and Compensation Committee.

Akira Hamamoto

Director,
Audit &
Supervisory
Committee
MemberBased on his extensive management experience and experience as a Full-time Member ofthe Audit & Supervisory Committee of Japanʼs leading financial institution, he wasappointed as Senior Managing Executive Officer of the Company in 2021 and contributed toensuring the soundness of the Companyʼs management as the Director in charge of theInternal Audit Department. He was reappointed as a Director with the expectation that, by
taking advantage of his knowledge, he would contribute to ensuring the sound management of the Company as a Director who is also an Audit & Supervisory Committee Member.

Koichiro Hiraiwa

Director,
Audit &
Supervisory
Committee
Member(Outside Director)(Independent
Director)

Based on his experience at the central bank of Japan and Japanʼs leading telecommunication company, as well as the extensive knowledge he has acquired through management ofa major hotel, he has contributed to the Board of Directorsʼ appropriate decision-making
and overall management supervision as an Independent Outside Director, and to neutral
and objective audits, and has therefore been reappointed as a Director.
We expect that he will contribute to ensuring the sound management of the Company asan Independent Outside Director and contribute to improving the soundness, transparency, and fairness of management as a member of the Governance Committee, theNomination Committee, and the Compensation Committee, based on the above
knowledge and from an objective perspective independent from the management teamthat executes duty.

Hiroko Kaneko

Director,
Audit &
Supervisory
Committee
Member(Outside Director)(Independent
Director)

Based on her extensive experience at major audit firms and as a university professor, as wellas her in-depth knowledge as an accounting expert, she has contributed to the Board of
Directorsʼ appropriate decision-making and overall management supervision as an
Independent Outside Director and to neutral and objective audits and has therefore beenreappointed as a Director.
We expect that she will contribute to ensuring the sound management of the Company as an
Independent Outside Director, and contribute to improving the soundness, transparency, andfairness of management as a member of the Governance Committee, the Nomination
Committee, and the Compensation Committee, based on the above knowledge and from an
objective perspective independent from the management team that executes duty.

Masayuki Saito

Director,
Audit &
Supervisory
Committee
Member(Outside Director)(Independent
Director)

Based on his extensive management experience at Japanʼs leading manufacturer and his
extensive knowledge in the finance and accounting fields, we expect that he will contribute to
the Board of Directorsʼ appropriate decision-making, overall management supervision, andneutral and objective audits as an Independent Outside Director and has therefore beenreappointed as a Director.
We expect that he will contribute to ensuring the sound management of the Company as an
Independent Outside Director and contribute to improving the soundness, transparency, andfairness of management as a member of the Governance Committee, the Nomination
Committee, and the Compensation Committee, based on the above knowledge and from an
objective perspective independent from the management team that executes duty.

(Note) The respective terms the areas of expertise indicate are the following: “Management” for general corporate management; “Finance” for treasury; “Treasury” forfinance and accounting; “Legal” for legal, compliance, and risk management, and; “Global” for global business.

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Status of activities of the Board of Directors
The Board of Directors meetings are held every month, in principle. The meetings were held 14 times in FY2022, where important management matters such as the next Medium-termManagement Plan, HR strategies, major investment projects,
business strategies of each business division, and IR activities
were deliberated and decided. In addition, the significance ofstrategic shareholdings was verified, and details of deliberationsin the advisory bodies to the Executive Committee, such as risk
management, compliance, sustainability, and digitalization,
were regularly reported to the Board of Directors. Then, theBoard of Directors deliberated the important policies for eacharea. Furthermore, the status of audits is reported by the Audit& Supervisory Committee in every meeting.
Attendance at the Board of Directors meetings by Directors
and Audit & Supervisory Committee Members in FY2022 was
as shown on the right.

14/14 times (100%)

Seiji Kawabe, Takahiro Yanai,
Kanji Nishiura, Kazumi Anei,
Haruhiko Sato, Hiroyasu Nakata,
Yuri Sasaki, Go Watanabe,
Koichiro Hiraiwa, Hiroko Kaneko

11/11 times (100%)

Taiju Hisai, Takuya Kuga,
Akira Hamamoto

10/11 times (91%)

Masayuki Saito(Note) Regarding Taiju Hisai, Takuya Kuga, Akira Hamamoto, andMasayuki Saito, attendance at the Board of Directors meetings
held later than June 28, 2022, is provided as they were newly
appointed as Directors in the General Meeting of Shareholders
held on June 28, 2022.

Status of activities of each committee
Governance Committee
The committee meetings were held three times in FY2022 andconducted PDCA for effectiveness assessment by deliberating
the manner of effectiveness assessment for the Board of
Directors and the analysis of the assessment results.
Attendance by Directors was as shown on the right.

Nomination Committee
The committee meetings were held five times in FY2022 anddeliberated the selection of Director candidates, skills that the
Directors should have (skill matrix), selection/dismissal standards, and independence standards for Directors. Furthermore,
the committee discussed the expertise, quality, etc. required for
MHCʼs President & CEO as a part of the succession plan for the
President & CEO and deliberated on the next President & CEO
based on the candidate list.
Attendance by Directors was as shown on the right.
Compensation Committee
The committee meetings were held eight times in FY2022 anddeliberated the Directorsʼ remuneration scheme and standards,
verified the amount paid as performance-based compensation,and deliberated the adoption of a performance-based stockcompensation plan.
Attendance by Directors was as shown on the right.

3/3 times (100%)

Seiji Kawabe, Takahiro Yanai,
Kanji Nishiura, Hiroyasu Nakata,
Yuri Sasaki, Go Watanabe,
Koichiro Hiraiwa, Hiroko Kaneko

2/2 times (100%)

Takuya Kuga, Akira Hamamoto,
Masayuki Saito

5/5 times (100%)

Seiji Kawabe, Hiroyasu Nakata,
Yuri Sasaki, Go Watanabe,
Koichiro Hiraiwa, Hiroko Kaneko

4/4 times (100%)

Takuya Kuga, Masayuki Saito

8/8 times (100%)

Takahiro Yanai, Hiroyasu Nakata,
Yuri Sasaki, Go Watanabe,
Koichiro Hiraiwa, Hiroko Kaneko

7/7 times (100%)

Takuya Kuga, Masayuki Saito(Note) Regarding Takuya Kuga, Akira Hamamoto, and Masayuki Saito,
attendance at the committee meetings held later than June 28,2022, is provided as they have been members since June 28,
2022.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

78

Introduction

Value Creation Story Business Strategies

Evaluation of the Effectiveness of the Board of Directors

Selection and Dismissal of Directors

Policies for effectiveness assessment of the Board of
Directors
MHC has continued efforts to further improve the effectiveness of the activities of the Board of Directors basedon the review and assessment by all of the Directors on
their activities throughout the year for the purpose ofmaintaining and improving the function of the Board of
Directors.

The Board of Directors resolves the appointment ofcandidates to serve as Directors after the Nomination
Committee, of which Independent Outside Directors
comprise the majority, holds discussions in advancebased on the selection standards described below. The
Board of Directors also resolves the appointment ofcandidates to serve as Directors who are also Audit &Supervisory Committee Members after the Nomination
Committee discusses it and the Audit & Supervisory
Committee agrees to it.
In addition, if a Director is found to meet the dismissal standards described below, their dismissal isdeliberated by the Nomination Committee in a timely
manner and decided by the Board of Directors.
See pages 76-77 for reasons for the appointment
and expected role of each Director.

Assessment manner for FY2022
Having confirmed the validity of the self-assessment
manner used for FY2022, MHC decided to conduct asurvey of all the Directors for FY2023 as well.
In the survey for FY2022, questions on the topics to
be entrusted to business execution and the standards
for items to be submitted to the Board of Directors, inaddition to the questions on themes that should be
discussed by the Board of Directors, in order to further
stimulate discussions at the Board of Directors. MHC
also added questions on the effectiveness of theGovernance Committee, Nomination Committee, andCompensation Committee, in addition to the Board of
Directors.
Based on the results of the survey, the Board of
Directors held in May 2023 assessed the effectiveness of
the Board of Directors, etc., taking into account thediscussion at the Governance Committee held in April
2023.

Results of effectiveness assessment
The major results of the assessment above are shown on
the left.
① It was determined that the Board of Directors, etc. of
MHC are sufficiently performing their roles.
● Because sufficient prior explanations of important
agenda items mainly focusing on key topics such as
the medium- to long-term management direction andthe new Medium-term Management Plan had been
provided to Directors, understanding of the agenda
items was deepened and the efficiency of the Board of
Directors improved. In addition, measures to solve theissues recognized in the previous effectiveness assessment have been steadily implemented, and the operation of the Board of Directors has been improved. For
instance, communication and mutual understanding
among the Directors has significantly improved.
● Each Committee meeting was carried out in a timely
and appropriate manner and had highly-transparent
and fair discussions on the replacement of the
President & CEO and the remuneration of the Directors.
② Meanwhile, issues that should be addressed to further

enhance the effectiveness of the Board of Directors, etc.
have been recognized.
● It is necessary to allocate time for deliberation according to the significance of the agenda items and tofurther improve prior explanations on key agenda items
in order to secure enough time for deliberation.
● There is a need for efforts to further promote Outside
Directorsʼ understanding of the overall global businessof MHC.
Initiatives for FY2023
MHC will strive to further enhance corporate governanceand improve the effectiveness of its Board of Directors,
etc., by implementing measures to solve each issue
specified above.

79

Message from the
President & CEO

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Selection Standards
1. Directors and Audit & Supervisory Committee
Members should have the mental and physicalsoundness sufficient to execute duty.
2. Directors and Audit & Supervisory Committee
Members should be persons who are wellrespected, possess excellent integrity, and holdthemselves to high ethical standards.
3. Directors and Audit & Supervisory Committee
Members should have a law-abiding mentality.
4. Directors and Audit & Supervisory Committee
Members should be expected to make objective
judgments regarding management and haveexcellent insight and perspicacity.
5. It is reasonable to consider that the candidates
will help strengthen the functions of the Board of
Directors, in view of their knowledge, experience, capabilities, and similar factors.
6. In addition to 1. to 5. above, candidates for
Outside Directors should (i) have experience,achievements, and knowledge in their fields ofspecialization, (ii) be able to contribute to theimplementation of appropriate decision making
and management supervision of the Board of
Directors, and (iii) be expected to secure thetime necessary to fulfill their duties.
7. Candidates for reappointment should have
performed roles expected of them during eachof their previous assignments.

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Dismissal Standards
1. The Director significantly damaged the value of
the Company by neglecting their duties.
2. The Director violated laws, Articles ofIncorporation, or other regulations/rules of theCompany or conducted an act against publicorder and/or morals, which caused serious
damage to the Company or hindrance to thebusiness of the Company as a result.
3. The Director is deemed to not meet the selection
standards for Directors.

Process of Replacement of the President in April 2023
MHC discussed a succession plan for appointing thenext President & CEO in the Nomination Committee,
which was established in April 2022.
The Nomination Committee first specified selection
standards for President & CEO, such as “strategic intelligence”, “leadership”, and “ability to make decisions.” In
addition, the committee discussed and identified expertise specifically required for the President & CEO of MHC
and defined evaluation criteria for candidates for the
President & CEO, taking into account “attributes andability”, “expertise and skills”, “global management
experience”, etc.
With these in mind, a series of Nomination
Committee meetings discussed the selection of the
President & CEO by creating a long list of presidential
candidates and then making a short list based on thelong list. As a result, they concluded that Mr. Taiju Hisaiis the most suitable person to be the next President &CEO, and this was resolved at the Board of Directors
meeting.

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80

Basic policy
MHCʼs officersʼ remuneration is determined by also taking into account officersʼ incentives to increase corporate value
through the execution of business strategies.
● The level of remuneration is appropriate with respect to the roles and responsibilities of each officer and is also based on market
levels, from the viewpoints of increasing medium- to long-term corporate value and improving short-term business performance.
●

Remuneration system
In principle, Executive Directorsʼ remuneration, etc., consists of base remuneration (fixed remuneration), annual incentive compensation (performance-based monetary compensation), and medium- to long-term incentive compensation(performance-based stock compensation). As annual incentive compensation, cash is paid as a bonus, while mediumto long-term incentive compensation is paid as a provision of MHCʼs shares, etc., in a trust framework.
MHC has established a payment ratio for performance-based compensation and non-performance-based compensation to maintain a sound performance-based ratio. In addition, MHC has also established appropriate short-term
and medium- to long-term incentive ratios under this remuneration system to enhance not only short-term businessperformance but also medium-to long-term corporate value.
Specifically, the ratio of non-performance-based compensation (base remuneration) to performance-based compensation (bonus and stock compensation) is generally set at 1:0.6 (the ratio of base remuneration to bonus to stockcompensation is generally set at 1:0.3:0.3). Using this as the base case, the ratio is determined by taking into accountthe roles, responsibilities, and other factors with regard to each Director on a comprehensive basis.

Fixed

Type of
Remuneration
Basic
Remuneration

62.5％
1

18.75％
0.3

Floating

Bonus(short-term
incentive)
Performancebased

Remuneration
Ratio

Stock
Compensation(Medium-to
Long-Term
Incentive)
Performancebased

18.75％
0.3

Details of Remuneration

1. The amount determined according to title is paid monthly.

1. The amount paid to each individual is determined based on the
consolidated business performance of the previous year, etc.
2. The financial indicators, etc., emphasized in the management strategy
as indicators representing the Companyʼs growth are set as the KPI
for evaluating company-wide performance, and the targets are set
according to the Companyʼs numerical targets (net income
attributable to owners of the parent, ROA, ROE, OHR).
3. The achievement of the executive officers, excluding Representative
Directors in their duties is evaluated using a standard evaluation
sheet, from the perspective of performance and the level ofcontribution regarding the duties.
1. From the perspective of increasing corporate value over the medium
to long term, indicators set as numerical targets, etc., under the
Medium-term Management Plan (net income attributable to owners ofparent, ROA, ROE, and TSR against TOPIX growth rate) were set as
key performance indicators (KPIs).
2. Using a trust framework, points are offered in accordance with the title
and term in office in accordance with the regulations for share delivery.
In the fiscal year following the final fiscal year of the Medium-termManagement Plan, a portion of shares corresponding to the number ofaccumulated points is converted into cash value, and compensation isprovided in the form of Company shares and cash at a ratio of 50:50.

Evaluation Method/
Ratio

Range Based on KPI
Achievement−−[Representative Director]
Company-wide
performance evaluation:
100%[Executive Director](Other than Representative
Director)
Company-wide performance
evaluation: 70%
Evaluation of responsible
duties: 30%

Company-wide
performance
evaluation: 100%

0-150％

0-150％(Note) In addition, in the event that it becomes necessary to reside in an area away from home, an appropriate property shall be provided as company housing.

For non-Executive Directors, including Outside Directors (excluding Directors who are Audit & Supervisory Committee
Members), from the standpoint of ensuring the effectiveness of the supervisory function, bonuses and stock compensation, which are incentive compensation, shall not be paid. Remuneration shall be limited to basic remuneration only.

Fixed

Type of
Remuneration

81

Basic
Remuneration

Remuneration
Ratio

Details of Remuneration

100％

1. For Internal Directors who do not concurrently serve as Executive Officers (excluding those who are Audit & Supervisory
Committee Members) and Outside Directors (excluding those who are Audit & Supervisory Committee Members), fromthe standpoint of ensuring the effectiveness of the supervisory function, bonuses and stock compensation, which are
incentive compensation, shall not be paid. Remuneration shall be limited to basic remuneration only.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Value Creation Story Business Strategies

Performance-based compensation
With respect to bonuses and stock compensation, financial
indicators, which are emphasized as indicators of MHCʼs
growth from the perspective of management strategy are set
as indicators (key performance indicators, or “KPIs”) for thecompany-wide performance evaluation to clarify the relationship between business performance and remuneration.
Bonuses
The net income attributable to owners of the parent, ROA, andROE, which have been set as MHCʼs numerical goals, are set
as KPIs for the company-wide performance evaluation.
The bonus of Representative Directors is fully linked tothe company-wide performance evaluation, with theamount to be paid determined within the range of 0% to150% of the standard amount, based on the level ofachievement of the projection for the key performanceindicators (KPIs) for company-wide performance evaluation.
The bonus of Executive Directors, excluding
Representative Directors, is based 70% on the company-wide performance evaluation and 30% on the evaluationof the duties for which each individual is responsible. The
amount to be paid based on each evaluation is determinedwithin the range of 0% to 150% of the standard amount.
For the portion based on the responsible duties, quantitative and qualitative evaluations are conducted by the President,
using a standard evaluation sheet, from the perspective ofperformance and the level of contribution regarding the duties
handled by the relevant Executive Director. The purpose is toenhance the incentive of each Director by appropriately evaluating not only the level of achievement of performance targets
but also results, such as the level of contributions, whichcannot be evaluated by quantitative means alone.
Stock compensation
From the perspective of increasing its medium- tolong-term corporate value, (1) net income attributable toowners of the parent, (2) ROA, (3) ROE, and (4) TSR
against TOPIX growth rate, which MHC has set as numerical goals, etc. in the Medium-term Management Plan, areset as indicators (KPIs) for the performance evaluation.
By using a trust framework, MHCʼs shares, etc. corresponding to share conversion points, which are calculated

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

using the following formula, are provided. Specifically, one
share of MHC or a corresponding amount of cash per point
is delivered. In principle, the portion of MHCʼs shares possessed in the trust is converted into cash value therein, andcompensation is provided in the form of Company sharesand cash at a percentage of 50:50.
The number of points granted corresponding to the position
and the number of months in office of the relevant person(the aggregate number of points during the three-year periodof the Medium-term Management Plan)＝

Remuneration for Directors

Message from the
President & CEO

Shareconversion
pointsIntroduction

×The performance-linked factor based on the level ofachievement of KPIs (ranging from 0 to 150%)

Non-performance-based compensation
When it is necessary for Directors (excluding Outside
Directors and those who are Audit & Supervisory Committee
Members) to reside in an area away from home due to atransfer resulting from a change of duties or base, MHC
provides such Directors with appropriate company housing.
The company housing shall be properties of a generaland standard level, and the upper limit of rent by title andregion shall be established beforehand. The company
housing rent to be calculated based on the predetermined
rate (when the total rent exceeds the limit, all of theexcess amount is added to the amount for collection)
shall be collected from Directors as their own expenses.
Remuneration determination policy
In order to ensure transparency and objectiveness in determining officersʼ remuneration, etc., MHC decides details of
the remuneration, etc., determination policy, and other relevant matters at a meeting of the Board of Directors after theCompensation Committee, the majority of which consists ofIndependent Outside Directors deliberates those matters. In
addition, the Compensation Committee deliberates thevalidity of the amount and composition of remuneration every
year based on the remuneration-related data provided by an
external specialized institution. The members and chairperson of the Compensation Committee are selected by the
Board of Directors, and the committee makes decisions by amajority of committee members attending. It is stipulated ininternal rules that the Board of Directors shall make decisions
in recognition of the decisions made by the committee.

KPIs and Evaluation Ratio of Performance-based Compensation
Evaluation Ratio
KPI

Company-wide Net income attributable to owners of the parent
ROA
performance
BonusesROE
evaluation
Evaluation of
Evaluatedindividually
Responsible Duties
Net income attributable to owners of the parent
Company-wide
ROA
Stock
performance
ROE
Compensation
evaluation
TSR against TOPIX growth rate

Framework for KPI achievement
rate and payment coefficient incompany-wide performance
Payment
evaluation

Representative
Director

Executive Director
Other than the
Representative Director

100%

70%

−

30%

100％

100%

100%

30％
0％

coefficient150％

Achievement
rate

50％

100％ 135％

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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