Part 3

CORPORATE GOVERNANCECORPORATE GOVERNANCE

Yoichi Kobayashi

Shiro Sugata

Mariko Tokuno

Charles Yin

Noriyuki Kuga

Outside Director

Outside Director(Chairperson of the Board)

Outside Director(Chairperson of the Nomination andCompensation Committee)

Outside Director

Outside Director

Outside Director Roundtable

Improvement ofCorporate Value over theMedium to Long TermThrough Business
Structure Reforms
The Yamato Group is engaging in business structure reforms to realize sustainable growth and themedium- to long-term enhancement of corporate
value, alongside the reinforcement of corporate
governance that supports this endeavor. Fiveindependent outside directors gathered to engage
in lively discussions about the issues surrounding
the current status of corporate governance andthe achievement of the medium- to long-term
enhancement of corporate value.

Effectiveness of the Board ofDirectors and Nomination andCompensation Committee
Pertinent Discussions Held by the Board of
Directors That Focus on Important Matters
SugataThe Yamato Group Board of Directors has

been increasing the ratio of outside directors and continuously transforming the governance structure. An
example of this is myself, an outside director, acting aschairperson. In addition to implementing pre-planned
agenda setting for the year and pre-meeting briefings,
we are also advancing our initiatives for improving theeffectiveness of the Board of Directors, such as
relaunching site observations.
In light of these topics, I would like to hear everyone’s opinions about the status of discussions regarding the actual Board of Directors meetings.
Kobayashi

I believe that Yamato’s governance structureis highly advanced even among Japanese companies,
considering actions such as outside directors making

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up more than half of the Board of Directors and an outside director acting as chairperson of the Board. Having
an outside director as the chairperson enables a selection of appropriate agenda items discussion by theBoard of Directors. This also enables the enhancementof discussions by dividing each item into resolutions,information on matters, and agendas. If the chairperson
deems it necessary to hold further discussions of topics
that arose from the day of Board of Directors meetings,
they will actively facilitate these discussions, such asrequiring the executive side to provide other opportunities for comprehensive explanations and reports.
Furthermore, during site observations in the Kyushu
area, I gained a comprehensive understanding of theideal future operations regarding our facility strategies,
which are a key issue in business structure reforms,
such as the consolidation and enlargement of sales
offices and separation of terminal functions. In addition
to dialogues with various site managers, I received further explanations from the responsible executive officer
who accompanied us from the Head Office, which further deepened my understanding. Based on such initia-Yin

Part 3In recent years, there has been a need toreinforce corporate governance in response to thesense of uncertainty caused by geopolitical risks andsudden changes in the business environment. So,
Yamato is creating a governance structure in line withthe changing times. Through dialogues with employees
during observations, we are developing practical discussions with the Board of Directors while understanding the implementation status of and issues withmanagement strategies.
The logistics industry has recently been facing international headwinds, such as the COVID-19 pandemic
and rising fuel costs. However, Yamato has been treating these circumstances as an opportunity. I believe
Yamato can enhance its competitiveness by dramatically innovating logistics and its own business model.
As a logistics company that represents Japan, I believe
Yamato can become a company able to win on aglobal scale by proactively adopting the management
techniques and sense of speed of global corporations,and I myself will actively engage in these efforts.

tives, I recognize that the Board has been able to focus
on important matters and hold pertinent discussions.

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CORPORATE GOVERNANCECORPORATE GOVERNANCE

Part 3

Part 3

Outside Director Roundtable

Improvement of Corporate Value over the Medium toLong Term Through Business Structure Reforms

Numerical-Based Discussions that are
Reasonable and Objective

Kobayashi

We have a vision and strategies, but what

about quantitative targets? I have also repeatedly
stated how vital it is to know the results and progress

SugataInstitutional investors in small meetings,

which have been held continuously since the fiscal
year ended March 31, 2022, have also shown a highLively Discussions Focused on Outside Directors
Conducted by the Nomination andCompensation Committee

Looking at one individual project, the outside direc-

fiscal year ending March 31, 2027. With various environmental changes expected to occur in the future,what kind of issues do you think are of particularof quantitative targets. I believe that we are improvingon these points.

map for its medium-to long-term strategies up to theSugata

Next, regarding the effectiveness of theNomination and Compensation Committee, I would

importance to the Company to realize an improvementof medium- to long-term corporate value?

level of interest in improving the efficiency of the Board

tors exchanged various opinions with the executive

like to ask you about the status of activities, concreteof Directors. Please share some examples of where theside when deciding to introduce freighters in 2022. In

details of discussions, and content and issues you

Kobayashi

remarks and advice of the outside directors have beenlight of issues in the logistics industry, such as the 2024

would like to discuss in depth in the future.

agement structure, we have been actively promoting

reflected in the activities of the executive side, improv-problem, and aimed at the creation of a sustainable

Since President Nagao took over the man-structural reforms for the entire Group. Despite needSince June 2022, all outside directors partici-

ing time to do so, current initiatives and policies are

remodeled three airplanes from overseas. This was apate in the Nomination and Compensation Committee

moving in the right direction and the implementation

major investment project and faced the risks of theand it comprises one inside director and five outside

has been highly praised.

exchange rate and fuel procurement. We have provideddirectors. I, an outside director, was appointed as chair-of the Board of Directors is whether it can contributea lot of advice to the executive side on agenda items

person. The committee is held once a month and I

increasing operating profit margin in the short term.

to the improvement of corporate value and whether it

based on awareness of the significant impact on per-believe that the outside directors actively stating their

Accordingly, the first step is to determine how muchcan monitor the legitimacy of execution. Since theformance and in view of the personal experience pos-opinions based on the combined expertise from their

we can reduce costs and how much we can reduce

executive side is often required to provide more con-sessed as outside directors. I believe that suchvarious backgrounds really enhances the Nomination

business losses and other losses. I believe thatcrete and quantitative explanations regarding thediscussions have led to the execution of this project

and Compensation Committee. To describe one spe-

Yamato’s measures for improving profitability are theimprovement of corporate value, we have ensured thatwith appropriate consideration of the risks involved.

cific discussion, succession plans for the next genera-

further reinforcement of its strongest asset, TA-Q-BIN,

tion of management team members are not simply

and its differentiation from other companies. We must

about who will be the successor, but also about thealso minimize and withdraw from our weak points as

strategies has changed according to the suggestions oflayers below, connecting it to the discovery and devel-much as possible. This is exactly what we intend to dooutside directors, including myself. Since I wasopment of management personnel that play a core role

through the structural reforms that are currently being

appointed as a director, I have felt that Yamato hasin the Company. It is necessary for the Nomination andimplemented. One pillar of these reforms is Yamato’s

as a result of the more precise strategies presented bygood labor management but lacks human resource

Compensation Committee to understand humanfacility strategies. We have been vastly reducing fixed

the executive side in response to the basic message ofstrategies linked to management strategies. By encour-resource strategies and hold discussions that include

costs and enhancing profitability by optimizing thethe outside directors, which is that it should be shown

aging the discussion of this issue at every opportunity, I

the connection to these strategies.

number of facilities necessary for providing services

through figures. Accordingly, rather than only improving

feel that we have made appropriate changes.

ing the quality or speed of discussions andand robust logistics network, we purchased anddecision-making.
Kuga

To put it into other words, the effectivenesswe have numerical-based discussions. In this sense, I
believe that our discussions are reasonable andobjective.
TokunoI think that we have improved effectivenessthe effectiveness of the Board of Directors, I believe

TokunoThe purpose of Yamato’s human resource

TokunoThe key to measures for improving profitability isthrough consolidation and enlargement of sales offices
Kuga

Currently, there are major changes occurringand establishment of terminals with different functions.
Meanwhile, as a medium- to long-term growth strat-

that the performance of the executive side of thewithin the Yamato Group. Following these changes, IBoard has also improved.

believe the vital role the Nomination andegy, we must establish a new revenue base in line withCompensation Committee should play is holding dis-

Yamato’s specialty, TA-Q-BIN. I believe that one way tocussions related to the human resource system anddo this is to enter into global business, such as various

compensation system, drafting succession plans, andcountries in Asia, rather than just the Japanese market,

conducting follow-up evaluations.

where the problems of the falling birth rate and aging
population are worsening. We could do this throughmeasures that include M&As with foreign businesses.

Issues in Achieving Medium- to LongTerm Corporate Value Improvement
Enhancement of Profitability by Thoroughly
Implementing Structural Reforms andPromoting Growth Strategies
SugataAt the accounts meetings held in the fiscal

year ended March 31, 2023, Yamato disclosed the road46

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Kuga

To develop globally and expand corporate

business domains, Yamato needs to create added
value and differentiate itself since it is in the positionof a follower. Thinking in terms of time, we should keep
in mind cooperation and collaboration outside thecompany and must also further refine our strengths,
including TA-Q-BIN. I hope the executive side holds discussions and considers numerous aspects from theseperspectives.
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CORPORATE GOVERNANCECORPORATE GOVERNANCE

Part 3

Part 3

Outside Director Roundtable

Improvement of Corporate Value over the Medium toLong Term Through Business Structure Reforms

TA-Q-BIN started as a CtoC service, but today
corporate clients make up 90% of the overall delivery
amount handled. I am aware that increasing the profitability of these services for corporate clients is an urgent
issue. It has been identified that Japanese companies
are over a decade behind those in Europe and theAmericas within the corporate-oriented marketingdomain. During such a global era, to provide solutions
to corporate clients we need to utilize global-standard
marketing strategies and business intelligence andcreate an organization that corresponds to this scope.
Key issues regarding corporate clients in the YamatoGroup are the implementation of up-selling and crossselling and realization of even higher value-added proposals. For example, we must rapidly scale out our
high-value-added solutions, such as Lead Logistics
Partners (LLPs), at the same time as strategically andactively engaging in new developments. Furthermore,
it is vital that we set KPIs that promote these initiatives.
Yamato’s current management team members recognized the importance of this, and we are seeingchanges within the organization. However, in terms oftime, we should be advancing both organic growth andstrategic approaches and M&As.
YinTokuno

For Yamato to grow, it is important to firststrengthen the management foundation, then take onchallenges in new areas. Balancing these two endeavors leads to the long-term development of theCompany. We are currently engaging in structuralreforms to strengthen Yamato’s management founda-tion, in which human resources are highly significant.
Now, Yamato is clarifying the definitions of duties,
such as aiming to subdivide the operations of sales
drivers, creating a framework for so-called “job classes”.
We will deploy employees to the appropriate placesin the company in line with the development of an
employee evaluation system based on these definitions. I believe that the key to increasing the effectiveness of facility strategies is connecting these initiatives
with the promotion of such strategies while advancing
both the hardware aspects of consolidating and enlarging facilities and software aspects of optimal personnelallocation.
Since it is difficult to develop new growth areas with
only internal human resources, it is important thatexternal personnel with expertise enter the Company
as leaders and promote this development while fostering internal employees. Furthermore, since this nurturing requires a fixed amount of time, acquiring external
personnel is necessary to increase speed. Whileacquiring external personnel with expertise is liable togenerate friction with internal employees, we shouldcarefully share the direction of the Company with allemployees and proceed with conviction and understanding. Meanwhile, Yamato should also re-skill internal employees who have the potential to strengthenbase domains. Naturally, it is important that Yamato isa company where each employee continues to beaware of its mentality of “we all represent theCompany.” Employees who don’t understand thedirection the Company is heading are likely to leave.

I believe that doing everything we can to fully commu-

TA-Q-BIN sales offices around the country to 1,800,

nicate Yamato’s direction is a prerequisite of promoting

and their subsequent enlargement. Yamato is also

human resource strategies going forward.

advancing initiatives to utilize both the existing TA-Q-

BIN network and dedicated networks that are dediKuga

Focusing on capital efficiency, the Tokyo

cated to the needs of target areas. This includes theStock Exchange recently notified listed companies ofcreation of three new major networks—an EC logistics

requests for support in realizing management that isnetwork that fully launched in the fiscal year ended

aware of capital costs and stock prices. While theMarch 31, 2022, a refrigerated and “Temperature-Corporate Governance Code introduces the concept

controlled only” network, and a Transportation &of capital costs, Yamato has also set targets for ROE.

­delivery network designated for corporate clients.

However, I believe it is important to further deepen dis-Additionally, there have been major reforms moving

cussions about what specifically to implement in orderforward, including, the consignment of posting services

to maximize corporate value, such as optimization of

Kuroneko DM-Bin and Nekopos to Japan Post at thecapital structure that includes the purpose of growth

beginning of the fiscal year ending March 31, 2024.

investments and shareholder returns, in addition toI think that appropriate monitoring indicators willmeasures for enhancing the profitability and growth

be necessary in the future to measure the results of theof the business based on capital costs.

significant reforms that we have been steadily implementing. Furthermore, the final evaluation is a medium-Sugata

Since the fiscal year ended March 31, 2021,

to long-term increase in stock price, based on

we have been promoting Yamato’s grand design forenhancement of profitability and improvement of cor-management over the medium- to long-term, “YAMATO

porate value. I will continue to fulfill my role as an out-

NEXT100,” and the medium-term management planside director and chairperson of the Board to further“One YAMATO 2023.” While these plans have been

support appropriate discussions and decision-making

described as a full model redesign for the Yamato

to realize these targets.

Group, for a while after their launch I did not feel asense of change. However, these changes havebecome visible between the fiscal year ended March
31, 2023 and the fiscal year ending March 31, 2024.
An example of this is the consolidation of 3,500

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