Our Sustainability Corporate Governance⚫ Compensation for officers

Basic concept of corporate governanceTotal amount per type of compensation (thousand yen)

Based on our corporate policy of always making
proposals from the client’s standpoint with a fair and neutral
attitude, AZN firmly believes it is essential to establish
corporate governance to ensure compliance-oriented
management and to practice this policy. The Company’s
Board of Directors and Audit & Supervisory Board
acknowledge that the corporate governance framework
should primarily perform the following functions.

⚫ To protect and encourage the exercise of shareholders’ rights.
⚫ To ensure equal treatment of all shareholders.
⚫ To make timely and accurate disclosure regarding all
the important matters related to the company, including
its financial conditions, operating results, shareholder
composition, and governance.
⚫ To ensure the strategic orientation of the company, effective
supervision of management executives, and clear accountability

Corporate Governance System

Total amount ofcompensation(thousand yen)

Basiccompensation

Bonus

Restricted stockcompensation

OtherDirector(except outside Director)

21096

782411367

Audit & Supervisory BoardMember(excluding Outside Audit &Supervisory Board Members)

540－－－

1

Outside Officer

43376－－－

5

Category of officer

Performance-linked

Of the following, Number of eligible
officers
non-monetary(persons)
compensation,etc.

Evaluation of the effectiveness of Board of Directors
department. Moreover, to strengthen the supervisory
function of the Board of Directors, the Company
has established the Compensation Council and theNominating Committee, at least two of whose members
must be Outside Directors.

The Company ensures the effectiveness of audits ofDirectors' performance of their duties by maintaining theindependence of its Auditors and Audit & Supervisory
Board Members from the Board of Directors, and bycollaborating with auditing firms and its in-house auditing(1) Board of Directors

The Board of Directors deliberates and makes decisions on important matters concerning the Company’s management, and oversees theCompany's business and general management. Each of the two Outside Auditors has an advanced level of expertise, and they provide reliable
management oversight from their professional perspectives.

(2) Executive Officers

In light of the segregation of management and implementation, AZN has instituted an Executive Officer system. Executive Officers execute theoperations of the divisions or departments under their control, in accordance with organizational regulations and rules on the segregation of duties
set forth by the Board of Directors.

(3) ExecutiveCommittee

The Executive Committee, consisting of the President, full-time Directors, and Executive Officers, meets on a weekly basis to verify management
policies and discuss management strategies and business execution for the purpose of sharing problem awareness and having smoothcommunication among all members.

(4) Compensation
CouncilRemuneration for directors, within the total scope of remuneration approved by the General Meeting of Shareholders, is determined by theCompensation Council, which is composed of Directors selected by resolution of the Board of Directors. The Compensation Council is composedof three or more Directors, at least two of whom must be outside Directors as a rule for the purpose of raising the transparency and objectivityof the review process.

(5) Nominating
Committee

The Nominating Committee, a voluntary advisory body to the Board of Directors, deliberates on the selection and dismissal of senior managementand Directors and recommends candidates to the Board of Directors, which are decided by the Board of Directors. Also, the Nominating
Committee is composed of three or more Directors, at least two of whom must be outside Directors as a rule for the purpose of raising thetransparency and objectivity of the review process.

(6) Compliance
Committee

The Compliance Committee, consisting of the President, full-time Directors, Executive Officers/General Managers of the divisions, and external
legal counsels (attorneys), has been established in conjunction with the Board of Directors as a forum for deliberation on risk management andlegal compliance by the Company.

(7) Sustainability
Committee

The Sustainability Committee, consisting of the President and full-time Directors, was established to build a foundation for sustainable growth,
to oversee and monitor sustainability policies, strategies, and measures, and to manage and evaluate the progress of objectives resolved by theBoard of Directors.

General Meeting of Shareholders

AZN strives constantly to improve the effectivenessof its Board of Directors. AZN undertakes an annual
questionnaire survey of all Directors and Audit &Supervisory Board Members regarding the effectivenessof the Board of Directors, using the evaluation points listedat right. The results are then discussed and reported tothe Board of Directors. See right for a summary of last
fiscal year's survey results.
Conduct a questionnaire

Collect responses from all
the Directors and Audit &Supervisory Board Members

Questionnaire evaluation items

Summary of questionnaire results⚫Composition of the Board ofDirectors and Executive Officers⚫Operation of the Board of Directors⚫Agendas of meetings of theBoard of Directors⚫Supervisory framework by theBoard of Directors⚫Supervisory framework byshareholder

About the Board of Directors of theCompany, there were no importantmatters raised in each evaluation
item, whereas some findings about
the Board of Directors operations
were noted. We intend to make some
improvements, aiming to realize a more
effective Board of Directors.

Have discussions basedon questionnaire results

Report discussion results
to the Board of Directors

Risk management
Based on its Crisis Management Regulations, AZN
defines external crises, internal crises, disasters, andother crises as described at the right, and defines how torespond to crises when they occur. In the event of a crisis
that seriously threatens corporate operations, a task force
is immediately formed and company-wide action is taken
to resolve the problem.

❶E xternal risks● Information leak❶❷ Problems involved in business operations (including●customer consulting services)❸ Civil violent incidents, contact/problems with anti-social forces●❹ Criminal acts by employees (fraud etc.)●❺ Other risks/incidents associated with AZN’s credit●❷ Internal risks●T❶ raffic accidents by employees (property/personal damage)❷ Internal troubles (sexual harassment etc.)❸M ishaps of employees and their families, other work accidents❹ Other cases constituting a crime by employees❸D isasters etc.

❶ Extraordinary disasters including natural disasters●Legal Counsel

Audit & Supervisory Board

Nominating Committee
Compensation Council
Compliance Committee

Board of Directors
Audit Firm

Sustainability Committee
Executive Committee

President
Departments / Affiliates

Internal Audit OfficeCompensation for officers
AZN's Board of Directors has adopted a policy for
determining the details of compensation for individualDirectors.
Compensation for individual Directors for the fiscal year
in question is determined by the Compensation Council,
which is composed of 3 or more Directors (at least 2 of22

Aoyama Zaisan Networks ｜ Integrated Report 2023

whom must be Outside Directors) selected by the resolutionof the Board of Directors to increase the transparency andobjectivity of the review process. Its methods of determining
the details of compensation and the compensation sodetermined shall be consistent with the decision-making
policy resolved by the Board of Directors.

Information security management
For the purpose of continually maintaining andstrengthening our information security management
structure including personal information management,
we have obtained the International Organization forStandardization (ISO) 27001 international accreditationand information security management system certification.
We have developed and maintain systems based on thisstandard, and continue to further strengthen our systems
for managing confidential information.

Compliance initiatives
For the purpose of practicing fair and bona fide
management in compliance with laws, a Compliance
Committee consisting of the President, full-time Directors,
Executive Officers/General Managers of the divisions, andoutside legal counsels (attorneys) has been established. The
Compliance Committee performs the following operations:❶ To recognize potential risk of losing trust from the securities market andclients in business operations, and prepare countermeasures (draft)❷ To review if there is any compliance issue with specified joint real estate
venture operations, and give approval of their execution❸ To review and report preventive measures against serious compliance violations❹ To examine/check suspicious compliance activities (potential complianceviolations)

Aoyama Zaisan Networks ｜ Integrated Report 202323