Last Update: June 25, 2021
Company Name: MIRAIT Holdings Corporation
Representative: Toshiki Nakayama, President and CEO
Exchange Code: 1417
Stock Exchange Listing: TSE 1st Section
Phone: +81-3-6807-3124[Summary]Corporate Governance Report
The status of Company's corporate governance is as follows.
I. Basic Approach to Corporate Governance
1. Basic Approach
The Company recognizes the importance of management as a company with social responsibilities, implements
organizational structures and mechanisms for ensuring transparency and fairness in decision making, and positions
the creation of relationships of trust with all stakeholders including shareholders to be one of the most important
issues in management. For this reason, the Company aims to enhance corporate value and achieve sustained growththrough the implementation and constant improvement of the following Corporate Governance Code.
[Reason for not Implementing the Principles of the Corporate Governance Code]The Group implements all of the principles of the Corporate Governance Code revised in June 2018.
[Disclosure Based on the Principles of the Corporate Governance Code]◆ Company objectives, business strategies and business plans (Principle 3-1-1)
The Company has established its management philosophy as follows, and aims to be a leading Japanese
corporation as a “Comprehensive Engineering & Services Company.”[Management philosophy]
1. Strive to be a leading Japanese corporation that realizes the highest levels of customer satisfaction and trust as a"Comprehensive Engineering & Services Company" that continually creates new value centered on the field of
information and telecommunications.
2. Contribute to the realization of an enriched and comfortable society by placing value on safety and quality andoffering the highest level of services.
3. Continue to be an enterprise that coexists and mutually prospers with people and society as a company that
fulfils its corporate social responsibility and always respects human beings.
[Management plan]
In order to respond to changes in the business environment, achieve the enhancement of corporate value as a“Comprehensive Engineering & Service Company” and achieve sustained growth, the Group believes it isnecessary to improve efficiency of management and further increase the productivity of existing businesses, while
expanding and strengthening the competitiveness of new businesses (“frontier domains”) in the medium to longterm.
To achieve this, the Group has established its 4th three-year medium-term management plan starting in FY2019.
[Overview of New Mid-term Plan]
1. Key Initiatives(1) Generating new business opportunities- Support regional development by leveraging the expanded regional coverage achieved through management
integration- Facing the challenge of new business opportunities transcending the conventional framework of businessareas and technologies

(2) Acceleration of transformation of business structure- Acceleration of transformation from carrier business to solution business- Promotion of transformation of quality in solution business (emphasis on profit)(3) Improvement of productivity and streamlining of business operation costs- Ensuring operation of construction work through stronger ties with partner companies- Sharing of systems and consolidation of common operations(4) Strengthening of human resources- Improvement of productivity and securing of human resources through work style reforms- Strengthening and utilization of human resources supporting expansion into new business domains andtransformation of business(5) Promotion of ESG management and improvement of safety and quality- Accurately perceiving business in terms of both risk and opportunity from the perspective of strengthening
ESG- Establishment of the MIRAIT Group brand responding to customers’ needs for peace of mind and reliability
in “improvement of safety and quality”(6) Capital policy- Maintaining a sound financial standing- Management conscious of capital cost
- Shareholder returns to be considered with the objective of achieving ROE of more than 8%.
2. Targeted Management Benchmarks
The Group has established net sales, operating income, operating margin and ROE (return on equity) as
objective benchmarks (KPIs) for determining the level of achievement of management targets in its 4th threeyear medium-term management plan. The targets for FY2021 are net sales of 450 billion yen, operating incomeof 27.0 billion yen, operating margin of 6.0% and ROE of 8% or higher. However, all numerical targets wereachieved ahead of schedule in FY2020, which is the second year of the plan, and targets for FY2021 were set tosteadily exceed performance of the previous year, at net sales of 470 billion yen, operating income of 30.5
billion yen and operating margin of 6.5%.
The reason these KPIs have been adopted is because of the recognition that they are important indicators forall stakeholders including shareholders to understand the Group’s management policies and management
strategies, in addition to enabling the evaluation of their progress and feasibility.
Operating income and ROE have also been adopted as indicators for the calculation of points granted in the
Board Benefit Trust performance-linked stock compensation scheme it has implemented to raise awareness ofthe contributions to performance of Group companies and enhancement of corporate value.
(Note) These figures for these KPIS are based on reasonable judgments according to circumstances, etc. thatcan be forecast as of the date of the submission of this report, and do not constitute a guarantee of theirachievement.
◆ Basic views and guidelines on corporate governance (Principle 3-1-2)
The Company recognizes that the realization of effective corporate governance is essential for the creation ofrelationships of trust with stakeholders. To this end, the Company will increase the effectiveness of corporate
governance by:
1. Ensuring the rights and equality, etc. of shareholders;
2. Appropriately collaborating with stakeholders other than shareholders;
3. Ensuring appropriate disclosure and transparency;
4. Performance of responsibilities of the Board of Directors, etc.; and5. Dialogue with shareholders.
Furthermore, the Charter of Corporate Ethics has been established as the basic policy of corporate ethics and a
specific code of conduct, and is published on the Company's website (https://www.mirait.co.jp/en)◆ Board policies and procedures in determining the remuneration of the senior management and directors(Principle 3-1-3)
These are stated in “II. Status of Corporate Management Organizations and Other Corporate Governance Systems
Related to Management Decisions, Execution and Supervision 1. Matters Pertaining to Organization Composition
and Organization Management, etc. [Directors' Remuneration]”.

◆ Policies and procedures in the appointment of directors and corporate auditors, and explanations of
nominations (Principles 3-1-4 and 3-1-5)
When nominating candidates for director and corporate auditor, the Company selects a wide variety of candidates
from inside and outside the Company, consults with the Nomination and Compensation Committee chaired by anindependent outside director and decides in the Board of Directors the candidates who have excellent character andknowledge along with a high level of management capability based on the committee’s responses.
In particular, independent outside directors are nominated based on their ability to fulfill their roles andresponsibilities from an expert and objective perspective, such as having abundant experience and knowledge intheir respective fields, and providing advice and supervision from the perspective of medium- to long-term
enhancement of corporate value. Moreover, independent outside corporate auditors are nominated based on theirability to increase transparency of the Board of Directors and enhance corporate value by appropriately monitoring
the state of compliance with laws, regulations and the Articles of Incorporation regarding management decisions
and execution of operations by directors with abundant experience and knowledge in their respective fields.
The reasons for the election of the individual directors and corporate auditors are described below in the “Noticeof the General Meeting of Shareholders.”◆ Overview of scope of the matters delegated to the management (Supplementary Principle 4-1-1)
The Company has established a Board of Directors as an organ for making decisions and supervising
management, a meeting of Group company presidents and a management meeting as a system for executing
business.
The Board of Directors makes decisions on group management policies and other important matters, in addition
to matters specified by laws, regulations and the articles of incorporation, while also overseeing the execution ofduties of directors by receiving periodic reports from directors on the status of the execution of their duties.
The Executive Committee is chaired by the president, and made up of full-time directors and others nominated by
the president. In addition to playing a role as an organ for deliberating important matters concerning themanagement strategies and execution of business of the Company and group, it summarizes and discusses topics inadvance to ensure active discussion in meetings of the Board of Directors. Corporate auditors also attend as
observers to swiftly detecting and addressing issues and problems. Executive officers are responsible for the
execution of business in the divisions they oversee.
◆ Proactive engagement by the Chief Executive Officer, etc. in the establishment and implementation of thesuccessor plan and planned development of successor candidates (Supplementary Principle 4-1-3)
The planning and development of successors to management executives such as the Chief Executive Officer are
carried out appropriately based on the Company’s management philosophy and management strategy. The
Nomination and Compensation Committee chaired by an independent outside director is consulted on the electionof the Chief Executive Officer, and the Board of Directors passes a resolution on this based on the committee’s
responses.
◆ Effective Use of Independent Directors (Principle 4-8)
The Company has elected several independent outside directors since it was established in 2010 with the
expectation that they will provide advice on promotion of sustained growth of the Company and enhance corporate
value in the medium- to long-term, in addition to presenting opinions based on comments from stakeholders suchas shareholders in meetings of the Board of Directors. At present, the Company has three independent outside
directors, and an effort is made to provide sufficient information such as providing explanations in advancedepending on the matter. The independent outside directors have a good rate of attendance to meetings of theBoard of Directors, and they make active comments on management policies and management improvements inaddition to supervising management based on their respective knowledge, adequately fulfilling the roles expectedof them by the Company.
Furthermore, since FY2016, the Company has been making an effort to more actively exchange information andshare awareness with independent outside directors in settings other than board meetings by regularly holding
meetings between independent outside directors and representative directors.
◆ Independence standards and qualifications of independent directors (Principle 4-9)
See “1. Matters Pertaining to Organization Composition and Organization Management, etc. [Independent
Directors]” in “II. Status of Corporate Management Organizations and Other Corporate Governance Systems
Related to Management Decisions, Execution and Supervision” for information on independence standards in the
Company.

◆ Composition of Board of Directors balancing diversity including gender and international experience, etc. withappropriate size (Supplementary Principle 4-11-1)
The Company gives consideration to a balance of personnel in the composition of the Board of Directors, andelects directors with abundant experience and excellent knowledge in their respective fields of management
strategy, global strategy, finance and human resources as a holding company overseeing a variety of areas ofbusiness.
Furthermore, independent outside directors participate in the Board of Directors with outside perspectives ofpeople with years of practical experience in corporate management, experts in business law and finance, andacademic experts, ensuring transparency and leading to the enhancement of corporate value.
The Company has made the Board of Directors an effective and efficient framework by enabling sufficient
functionality for a holding company and having certain officers concurrently serve on the boards of major
subsidiaries.
The Company has appointed two women as officers including one director and one corporate auditor.
The expertise and experience required of directors and corporate auditors are described in the “Notice of the 11th
Ordinary General Meeting of Shareholders.” (https://ir.mirait.co.jp/en/)◆ State of concurrent positions of outside directors and outside corporate auditors(Supplementary Principle 4-11-2)
The positions concurrently held by the Company's outside officers in listed companies are as follows.
- Outside director Chiharu Baba also serves as an outside director of Resona Holdings, Inc. which are listed on
the First Section of the Tokyo Stock Exchange.
- Outside director Mayumi Yamamoto also serves as outside corporate auditor of Morinaga Milk Industry Co.,
Ltd., and outside director of JCU Corporation which is listed on the First Section of the Tokyo Stock
Exchange.
- Outside corporate auditor Chiaki Katsumaru (Ishikawa) also serves as an outside corporate auditor of Anabuki
Kosan Inc., which is listed on the First Section of the Tokyo Stock Exchange.
◆ Disclosure of the results of analysis and evaluation of the effectiveness of the Board of Directors as a whole(Supplementary Principle 4-11-3)
The Company endeavors to conduct sound and efficient management by checking the execution of duties of
directors in meetings of the Board of Directors, such as compliance with laws and regulations, risk management,
sharing of information, and the speed of resolution of issues.
Furthermore, once per year, all directors and corporate auditors have conducted self-evaluations concerning theeffectiveness of the Board of Directors to improve the function of the Board of Directors as a whole, and to share acommon awareness concerning the intended direction of the Company’s corporate governance.
Specifically, the self-evaluations were performed in the form of an anonymous survey enabling the hearing ofunreserved opinions on the composition of the Board of Directors, the state of operation of the Board of Directors,
the responsibilities and functions of the Board of Directors and the state of the Board of Directors from theperspective of outside directors and corporate auditors. The survey was collected by an external law firm with an
obligation of confidentiality, and the collected survey content was analyzed by a third-party organization Based on
the results of the analysis, the Company’s Board of Directors obtained good results when it examined and evaluatedthe current state, and also continued to discuss the issues related to the Board of Directors.
In the survey, the opinion was expressed that deeper discussion should be conducted on the desired form of the
new company after management integration scheduled for early in FY2022, matters related to the frame work of
the new company such as the corporate philosophy, the long-term direction of the Group as a whole and thegovernance structure, and further enhancement of the risk management system and operating aspects assuming an
increase in Group companies and the new company, and efforts will be made to conduct more in-depth discussion
and continually maintain and enhance the effectiveness of the Board of Directors through discussion of medium- tolong-term management strategies and management issues in the “Deliberation Forum” established in FY2017 as aplace for members of the Board of Directors to freely exchange opinions.
Outside directors and outside corporate auditors are given opportunities to tour the offices of operatingcompanies and construction sites as appropriate to provide a deeper understanding of the Company’s businessdetails and current condition.

◆ Training Policy for Directors and Corporate auditors (Supplementary Principle 4-14-2)
The Company periodically conducts officer training for directors and corporate auditors to provide a deeper
understanding of their roles and legal responsibilities, etc. The training spans basic topics such as corporate
governance, insider trading and the Construction Industry Act, in addition to case studies on corporate scandals andincidents.
Furthermore, outside directors and outside corporate auditors are given opportunities to tour the offices ofoperating companies and construction sites as appropriate to provide a deeper understanding of the Company’sbusiness details and current condition.
◆ Policy for constructive dialogue with shareholders (Principle 5-1)
1. Director responsible for overseeing dialogue with shareholders
The Company positions dialogue with shareholders and investors (“IR activities”) as a means to ensure
appropriate corporate valuation and trust, and contribute to sustained growth and medium- to long-term
enhancement of corporate value, and continually implements such IR activities.
IR activities are supervised by the Director and General Manager of the Finance and Accounting Department.
The Investor Relations Office, which is the responsible department, endeavors to provide timely and appropriate
disclosure of information in accordance with the “Disclosure Policy” published elsewhere. Furthermore, theDirector responsible conducts individual meetings with shareholders and investors wherever possible.
Moreover, in principle, the CEO directly provides explanations at the earnings briefings held twice each year andthe overseas IR meetings held several times each year.
2. Cooperation between internal departments
The Company has created a “timely disclosure system” and is making an effort to provide timely and appropriate
disclosure of important information through cooperation between departments to ensure IR activities areconstructive and meaningful. In addition, the Public Relations Office also cooperates to actively disclose a wide
range of information by utilizing the Company's website in addition to TDnet and EDINET. Meetings between theCEO, the Finance and Accounting Department, the Strategy Department and personnel responsible for eachbusiness are conducted on numerous occasions to review the materials used in IR activities such as earnings
briefings, in an effort to provide materials that are easy to understand and useful for shareholders and investors.
3. Increasing opportunities for dialogue aside from individual meetings
The Company holds two earnings briefings each year (for the 2nd and 4th quarters) for analysts and institutional
investors. Videos of the earnings briefings are provided on the website, etc. The Company endeavors to provide
important information to overseas institutional investors in English in a timely manner.
The Company also sends the “MIRAIT Report” summarizing the Company's performance and topics to allshareholders twice each year.
Materials disclosed by the Company are published on the Company's website (https://www.mirait.co.jp/en).
In addition, online company briefings are held for individual investors, and the company also participates inbriefings hosted by securities companies and other events as needed to explain the Company’s businessperformance, etc.
4. Feedback of shareholders’ views and concerns
The Company periodically reports to directors, senior management and other relevant personnel in the Group oncomments and concerns received from shareholders and investors using IR reports prepared by the Investor
Relations Office, and also implements appropriate feedback as required on the results of overseas investor
relations.
5. Measures to control insider information when engaging in dialogue
The Company has established “Rules on the Regulation of Insider Trading” and conducts appropriate
management of information in accordance with these rules if insider information is possessed when meeting withshareholders and investors to prevent such information from being communicated. In addition, there is a two-weekquiet period before the announcement of earnings (including quarterly earnings) to prevent information on earnings
being leaked, and no comments on earnings or responses to inquiries are provided during this period. However, if it
is found that a difference compared with the performance forecast arising during the quiet period is a fluctuation
subject to timely disclosure rules, the information is disclosed appropriately.

◆ Establishing and disclosing business strategies and business plans (Principle 5-2)
The Company already bases all of its decisions and actions in the establishment of Mid-term Management Plans,judgements on strategic investment and evaluations of fiscal year-end financial results on understanding andconsideration of the Company’s capital cost, and will continue to endeavor to determine and verify management
policies and strategies conscious of capital cost.
◆ Strategic shareholdings (Principle 1-4)
1. Standard of and Approach to Classification of Shares for Investment
If the purpose of investment is:(1) maintaining or strengthening business relationships with the Company in which shares are held;(2) maintaining or strengthening cooperative relationships for the promotion of alliance operations; or(3) coordination for efficient construction work, etc.,
the Group classifies such investments as strategic shareholdings. Investments made for other purposes areclassified as pure investments.
2. Method of examining the policy on cross-shareholdings and the rationality of shareholdings, and details of
examination on whether the holding of specific shares is appropriate by the Board of Directors, etc.
(1) Policy on holding shares
The Group holds shares when it is thought that holding the shares of a business partner will lead to theimprovement of the Group’s corporate value or the interests of shareholders. The Company checks theobjectives of shareholding and the state of trading, and gradually reduces shares for which the meaning ofshareholding is found to have diminished through quantitative and qualitative verification, by their sale, etc.
(2) Method of examining the rationality of shareholdings
The Group performs quantitative and qualitative examination of the medium- to long-term economic
rationality and future outlook of strategic shareholdings based on factors such as the risks and returns.
(3) Details of examination on whether the holding of specific shares is appropriate by the Board of Directors, etc.
The strategic shareholdings held by the Group are subject to investigation of the purpose of holding theshares and the status of transactions. Once every year, the Board of Directors performs quantitative andqualitative examination of each issue regarding whether the risks and returns are commensurate with thecapital cost, the purpose of holding the shares and future business trends, etc. to determine whether holding
the shares is appropriate.
Shares which are thought to have “little meaning to be held” as a result of a review are sold as needed whileconsidering factors such as the share price. Furthermore, the strategic shareholdings of the Group as a whole
and the condition of the reduction thereof are managed through annual reviews.
In FY2020, 18 stocks were sold in accordance with the above policy.
3. When exercising voting rights for shares it holds, the Company checks each proposal and makes comprehensive
decisions based on whether they contribute to the enhancement of the Group’s medium- to long-term corporate
value through dialogue with the company (department) in control of transactions with the business partner andverification of the Company’s Strategy Division.
◆ Responses to intentions to sell cross-shareholdings (Supplementary Principle 1-4-1)
When a company that holds the Company’s shares indicates that it intends to sell its shares, the Company does
not hinder the sale.
◆ Transactions with cross-shareholders (Supplementary Principle 1-4-2)
The Company does not engage in transactions with cross-shareholders which are not economically rational.
◆ Related party transactions (Principle 1-7)
The Company requires that competing transactions and transactions in conflict of interest by directors aredeliberated and resolved by the Board of Directors, and reports on the status of transactions are periodically madeto the Board of Directors.
Board members are required to submit a “Confirmation of Related Parties” to ascertain whether there are anytransactions with related parties such as the board members themselves, their close relatives, organizations they
represent and organizations in which they hold a majority of voting rights.
The Board of Directors receives reports on transactions with major shareholders periodically and as required, andprovides supervision to ensure the common interests of shareholders are not harmed.

◆ Exhibiting functions as a corporate pension asset owner (Principle 2-6)
With regard to the corporate pension plan, in addition to the defined benefit pension (contract-type) corporate
pension plans in MIRAIT Corporation and MIRAIT Technologies Corporation, the “MIRAIT Group Defined
Benefit Corporate Pension Plan” (MIRAIT Group DB) was implemented in October 2020 and is being managed asa federated defined benefit pension plan in order to integrally manage for the Group the defined benefit corporate
pension plans of SOLCOM Co., Ltd. and Sikokutsuken Corporation, which were two of the three companies that
underwent management integration in FY2018. (Note) TTK Co., Ltd. has implemented a defined contribution
corporate pension plan, and does not have a defined benefit corporate pension plan.
With regard to its operation, a governance system has been established by establishing the the Pension Committee
made up of the members such as officers in charge of personnel affairs and finance at MIRAIT Holdings
Corporation in addition to the officers or general managers in charge of personnel and general affairs and finance inoperating companies and employee representatives. The Pension Committee conducts asset and liability
management (ALM), has established the appropriate composition of strategic assets in the “Basic Policy on
Management of Pension Assets” based on basic approach of long-term investment with acceptable risk, andconducts monitoring of the state of management each quarter while obtaining information as appropriate from themaster trustee company as an external expert to ensure appropriate management of pension assets.
Furthermore, appropriate personnel have been assigned in MIRAIT Holdings Corporation to serve as the personnel
responsible for pensions, and efforts are being made to develop personnel by providing opportunities to learn andappropriately update specialized knowledge by dispatching them to external seminars on corporate pensions andthrough workshops conducted by external experts.
As reducing retirement benefit obligations will reduce the impact of managing a corporate pension on thecompany’s finances, new defined contribution pension plans have been introduced in SOLCOM CO., Ltd. and
Sikokutsuken Corporation to coincide with the implementation of the defined benefit system in the MIRAITGroup, and have been added to the same MIRAIT Group Defined Contribution Pension Plan as the existing defined
contribution pension plans of MIRAIT Corporation and MIRAIT Technologies Corporation and are managed on
the same platform.
II. Status of Corporate Management Organizations and Other Corporate Governance Systems Related toManagement Decisions, Execution and Supervision
1. Matters Pertaining to Organization Composition and Organization Management, etc.
[Directors][Outside Directors]
Supplementary
Independent
Name
Explanation of
Reason for Election
OfficerCompliant Items
Chiharu○- Former Deputy
He has abundant corporate management
Baba
President andexperience and extensive knowledge of financial
Representative Director
accounting, risk management and management inof Mizuho Trust &general, and has fulfilled his role as an outside
Banking Co., Ltd. (until
director. His insight and knowledge are suitable for2007)
the supervision of management, and he has been
nominated for re-election as outside director to
improve transparency of the Board of Directors andstrengthen its supervisory functions.
Furthermore, he is expected to fulfill the role ofimproving governance of the Board of Directors
and enhancing its supervisory functions, and has
appropriately fulfilled this role by providing
comments on topics such as the governance systems
and internal control of the Group as a whole inmeetings of the Board of Directors and theNomination and Compensation Committee which
he chairs.
He has been designated as an independent officer
because he satisfies the independence standard

MayumiYamamoto○―

ShinichiKawaratani○―

specified by the Tokyo Stock Exchange and theCompany's independence standard.
She has advanced specialized knowledge andabundant experience concerning corporate legal
affairs as an attorney at law, has served as a memberof government councils such as the Central Labour
Relations Commission, and she has been nominatedfor-election as outside director to improvetransparency of the Board of Directors andstrengthen its supervisory functions because she issuitable for executing monitoring of the Company’s
management from an objective and specialized
perspective.
Furthermore, she is expected to have a role in risk
management, etc. related to business from a legal
perspective, and has appropriately fulfilled this role
through actions such as actively providing advice
from this perspective in meetings of the Board of
Directors and the Nomination and Compensation
Committee.
She has been designated as an independent officer
because she satisfies the independence standard
specified by the Tokyo Stock Exchange and theCompany's independence standard.
He has been involved in business investment andthe development of new businesses in the area of
information and communications for many years,
and has insight into the management of an
information and communications company based on
his experience as representative director andpresident of a company providing IT solutions.
Furthermore, he has worked on the creation of avariety of new businesses in Japan and abroad as theCEO of his own venture capital company, and has
extensive business experience overseas such as in
the United States. His insight and knowledge ofcreating and developing new business in Japan andabroad, in addition to corporate management of a
global business make him suitable for thesupervision of management of the Group, andbecause he can be expected to fulfill this role, he
has been nominated for election as outside director
to improve transparency of the Board of Directors
and strengthen its supervisory functions.
He has been designated as an independent officer
because he satisfies the independence standard
specified by the Tokyo Stock Exchange and theCompany's independence standard.

[Status of establishment, composition and attributes of chairman of voluntary committees]
Name of committee
Nomination andCompensation
Committee

Total
members

Standing
members

Insidedirectors

401

Outsidedirector

Outsideexperts
3

Chairman

Other

0

0

Outsidedirector

Supplementary explanation
In order to improve the objectivity and transparency of decisions on remuneration of directors, theNomination and Compensation Committee was established in December 2018 as an advisory organ to theBoard of Directors, and the Committee held six meetings in the current fiscal year (from the conclusion of theOrdinary General Meeting of Shareholders held in June 2020 until the Ordinary General Meeting of
Shareholders held in June 2021).
The Nomination and Compensation Committee comprises four members including three independent outside
directors and the President as of the date of filing this report (June 25, 2021).
The Committee reports the results of deliberation on nomination of candidates for director and policy, etc.
related to decisions on the method of calculation of officer remuneration to the Board of Directors, whichmakes decisions based on those reports.
[Corporate auditors][State of coordination between corporate auditors, the accounting auditor and the internal audit unit]
As of the date of submission of this report (June 25, 2021), the Board of Corporate Auditors comprised four
members including two outside corporate auditors, and there were two full-time corporate auditors including one
outside corporate auditor. No dedicated staff members are assigned to corporate auditors, but various organizations
provide support as needed.
The Board of Corporate Auditors holds meetings monthly in principle, and also hold meetings as necessary.
Eleven meetings were held in the current fiscal year. Each of the corporate auditors attended all eleven meetings(100% attendance rate), and conducting resolutions, reports and deliberations, etc. throughout the year.
The Board of Corporate Auditors considered the formulation of audit plans, preparation of audit reports,
selection of the accounting auditor, consenting to the compensation for the accounting auditor, and auditing of thecontent of proposals submitted to the Ordinary General Meeting of Shareholders.
Corporate auditors attended meetings of the Board of Directors, audited the operation of proceedings and thecontent of resolutions, and provided opinions as needed. The attendance rate of corporate auditors at meetings ofthe Board of Directors was 100%. Furthermore, they periodically met and exchanged opinions with therepresentative director.
Full-time corporate auditors attended other important meetings, coordinated with the internal audit unit, viewed
important approval documents, conducted hearings of directors, communicated with the directors and corporate
auditors, etc. of subsidiaries, and shared information on the status of audits with part-time corporate auditors inmeetings of the Board of Corporate Auditors.
Auditing of the state of execution of duties by directors by was carried out through these activities.
Corporate auditors periodically exchanged information with the accounting auditor on audit plans, quarterly
review results, audit results and quality management systems, and closely worked with the accounting auditor toperform monitoring and review activities for determining the suitability of accounting audit methods and results.
As of June 25, 2021, the Company’s internal audit unit was made up of three members. The internal audit unit
implements audits of the Company and Group subsidiaries centered on audits of operations after evaluatingcompanywide internal controls. Furthermore, it strengthens audit functions by thoroughly checking the state of
implementation of improvements such as corporate auditors’ findings and proposals.
Corporate auditors and the internal audit unit coordinate with each other by meeting when necessary to exchange
information on audit plans, the state of implementation of audits and problems identified as a result of auditing.
[Outside auditors]
Name
HiroshiSeki

Independent
Officer○

Supplementary
Explanation ofCompliant Items- Former General
Manager of Tochigi
Branch, Nippon
Telegraph andTelephone East
Corporation (until 2010)- Former Executive Vice
President and General
Manager of Marketing
Headquarters, NTT

Reason for Election
He has abundant experience in various areas in thetelecommunications industry including corporate
sales in the business operations of Nippon
Telegraph and Telephone East Corporation and its
group companies, and he has been nominated forelection as outside corporate auditor because he is asuitable choice for supervising the execution of theduties of directors from a neutral and objective
perspective.
He has been designated as an independent officer

TownPage Corporation(until June 2018)
Chiaki
Katsumaru(Ishikawa)○―

because he satisfies the independence standard
specified by the Tokyo Stock Exchange and theCompany's independence standard.
She has served as a certified public accountant for
many years, and has rich career and a high level ofexpert knowledge concerning corporate finance andaccounting in major audit firms and accounting
companies, and she has been nominated for election
as outside corporate auditor because she is a suitablechoice for supervising the execution of the duties of
directors from a neutral and objective perspective.
She has been designated as an independent officer
because she satisfies the independence standard
specified by the Tokyo Stock Exchange and theCompany's independence standard.

[Independence standard]
The Company believes outside directors and outside corporate auditors (“outside officers”) must have sufficient
independence to ensure the objectivity and transparency required for appropriate governance. The Company has
established the following independence standard for outside officers of the Company, and deems that an outside
officer (including candidates; the same applies below) does not have sufficient independence for the Company if
any of the followings applies.
1. Formerly worked in the Company or a consolidated subsidiary of the Company (“the Group”) *1
2. A major shareholder of the Company *2
3. An executive of any of the following companies, etc.
(1) Major trading partner of the Group *3(2) Major lender to the Group *4(3) Company in which the Group holds 10% or more of shares on the basis of voting rights, etc.
4. A certified public accountant who work for the auditing firm that is the Group's accounting auditor
5. An expert such as a consultant, accountant, tax accountant, attorney at law, judicial scrivener or patent attorney
who has received a large sum*5 of money or other property from the Group.
6. A person who has received a large donation from the Group *6
7. An executive of a company that is in a relationship of mutually appointing outside officers *7
8. A person whose close relative*8 is any of those listed in items 1 through 7 above (limited to important
personnel*9 except in the cases of items 4 and 5)
9. A person to who any of items 2 through 8 has applied in the past three years
10. Notwithstanding the provisions of the preceding items, a person for whom it is otherwise found there are
special grounds for a conflict of interests with the Company*1: Meaning a current executive director, executive officer or other similar person or employee (“executive”) or an
executive who has ever belonged to the Group.
*2: A major shareholder refers to a shareholder who holds 10% or more of shares on the basis of voting rights in
his/her own name or in the name of another person at the end of the current business year. If a major
shareholder is an organization such as a corporation or an association, this refers to an executive of saidorganization.
*3: A major trading partner refers to a customer or supplier of the Group for whom annual transactions account for
more than 3% of the Company's consolidated net sales or the trading partner's consolidated net sales.
*4: A major lender refers to a financial institution from which the Group is borrowing, and for which theoutstanding loans payable thereto exceed 2% of the Company's consolidated total assets or the financial
institution's consolidated total assets and the end of the current business year.
*5: Large sum refers to the following amounts according to the expert's involvement in the services provided.
(1) If the expert provides services to the Group as an individual, a large sum is when the consideration received
from the Group exceeds 10 million yen per year.
(2) If the organization to which the expert belongs provides services to the Group, a large sum is when the total
amount of consideration received from the Group by the organization exceeds 2% of the organization's
annual sales or total revenue. However, even if 2% is not exceeded, if the annual amount received by theorganization as consideration for services provided in which the expert is directly involved exceeds 10
million yen, this amount shall be deemed to be a large sum.
*6: This refers to a person who receives annual donations from the Group exceeding 10 million yen. If the partreceiving donations is an organization such as corporation or an association, this refers to a person who belongs
to the organization and is directly involved in the research, education or other activity related to the donations.
*7: This refers to a relationship in which an executive of the Group is an outside officer of another company, andan executive of the other company is an outside officer of the Company.
*8: Close relative refers to a spouse or a relative of the second degree or less.
*9: Important personnel refers to directors and executive officers.
[Directors' Remuneration]
1. Basic policy
The total amount (limit) of directors’ remuneration is specified in the General Meeting of Shareholders after
being approved by the Board of Directors, and the remuneration of individual directors uses a remuneration system
based on the roles and responsibilities of each position.
Furthermore, the policy on determination of the content of remuneration of individual directors is deliberated
upon by the “Nomination and Compensation Committee” (chaired by an independent director) comprising three
independent outside directors and the President as an advisory body to the Board of Directors to improve objectivity
and transparency and the results are reported to the Board of Directors, which determines the policy based on thereport.
Outside directors who provide supervisory functions are only paid monthly base remuneration considering theirduties.
2. Policy on determination of the amount of individual remuneration for base remuneration (monetary
remuneration) (including the policy on determination of the timing or conditions of granting remuneration, etc.)
The total amount (limit) of directors’ remuneration is specified in the General Meeting of Shareholders after
provisions being approved by the Board of Directors, and the base remuneration of individual directors (excluding
outside directors) is fixed monthly remuneration of which the amount is obtained by dividing the annual salary
based on the roles and responsibilities of each position by 15.
An amount equivalent to three months of fixed remuneration is the standard bonus (however, this is the amountremaining after deduction of 30% allocated to the Board Benefit Trust performance-linked stock compensation
scheme mentioned in 3.), and the number of months is variable based on comprehensive consideration of theCompany’s performance in the previous fiscal year, the performance outlook for the current fiscal year and the stateof payment of special allowances to employees, and is determined by the President on the assumption that theNomination and Compensation Committee is consulted.
The standard bonus is paid once annually in summer.
The percentages of fixed remuneration and variable remuneration are generally around 80% (12/15) for theformer and 20% (3/15) for the latter.
3. Policy on determination of the content of performance-linked remuneration and non-monetary remuneration, andthe method of calculation of the amount or number thereof (including the policy on determination of the timing or
conditions of granting remuneration, etc.)
With regard to performance-linked remuneration and non-monetary remuneration, a Board Benefit Trust
performance-linked stock compensation scheme has been introduced in order to clarify the connection between the
remuneration of officers the Company’s performance and share price, and to raise awareness of contributions to theimprovement of corporate value. Up to 74 million yen for the Company’s directors is contributed to the trust as
funds for the trust to acquire the shares required for each period of three fiscal years in advance, and the maximum
number of shares granted per fiscal year is equivalent to 28,000 shares (resolution of the 6th Ordinary General
Meeting of Shareholders held on June 28, 2016).
The Company’s consolidated operating income and ROE have been chosen as indicators for performance-linked
remuneration that can easily be used to raise awareness of the performance of Group companies and contributions
to the enhancement of corporate value, and the number of points granted is calculated by multiplying the basepoints set to allocate 30% of three months of monthly remuneration by the performance-linked coefficient based on
the Company’s consolidated operating income and ROE, and one share is granted for each point at the time ofretirement.
4. Policy on determination of the percentages of the amount of monetary remuneration and the amount of
performance-linked remuneration, etc. or the amount of non-monetary remuneration in relation to the amount ofindividual directors’ remuneration
Of the annual salary specified according to to the roles and responsibilities of each position of directors(excluding outside directors), the percentages of the amount of monetary remuneration and the amount of
performance-linked remuneration, etc. are around 80% fixed remuneration and 20% variable remuneration, and
30% of the variable remuneration is allocated to the Board Benefit Trust performance-linked stock compensation
scheme, which is a form of non-monetary remuneration.
(Note) In consideration of insider trading regulations, etc., all directors (excluding outside directors) are
required to contribute 10% or more of their monthly remuneration to the officers’ shareholding association inorder to increase awareness as management and awareness of the common goal of enhancing shareholder value.
Therefore, these percentages are effectively 72% fixed remuneration, 28% variable remuneration and 14% nonmonetary remuneration (share-based remuneration).
5. Matters related to determination of the content of remuneration, etc. of individual directors
The determination of remuneration of individual directors is left to the discretion of Toshiki Nakayama,
President and Chief Executive Officer, based on the assumption of consultation with the Nomination andCompensation Committee, to the extent of the total amount resolved by the General Meeting of Shareholders
based on a resolution of the Board of Directors.
The President and Chief Executive Officer entrusted with the decision prepares proposals for individual
remuneration based on the content of the policy on determination of the content of remuneration of individual
directors resolved by the Board of Directors, consults with the Nomination and Compensation Committee, anddetermines the content with the consent of the Committee.
[Incentives]
In accordance with the resolution of the 6th Ordinary General Meeting of Shareholders held on June 28, 2016, the“Board Benefit Trust” performance-linked stock-based remuneration system for the Group’s officers was
implemented from September 30, 2016 with the objective of clarifying the connection between the remuneration of
directors and the Company’s performance and share price, and raising awareness of contributions to theimprovement of medium- to long-term performance and corporate value.
Through the system shares of the Company are acquired through a trust using funds contributed by the Company,
and provided to directors upon retirement from their positions as officers in accordance with the Officer Stock
Benefit Rules stipulated by the Boards of Directors.
The ratio of performance-linked remuneration and fixed remuneration is generally around 1:4.
The Company’s consolidated operating income was chosen for the indicator for performance-linked
remuneration in FY2020 as an indicator that can easily be used to raise awareness of the performance of Group
companies and contributions to the enhancement of corporate value, and the number of points calculated from theresults of the Company’s consolidated operating income and ROE based on base points granted according to thepositions of officers were granted to officers in accordance for the Board Benefit Trust. with the Officer Stock
Benefit Rules
The consolidated operating income target in the initial business plan for the current fiscal year was 22.0 billion
yen. The actual result was 30.1 billion yen with ROE of 11.0%.