CORPORATE GOVERNANCECORPORATE GOVERNANCE

Part 3

Part 3

Corporate Governance
Basic Position on Corporate GovernanceCorporate Governance Framework

General Meeting of Shareholders

Based on its corporate philosophy, the Yamato Group carries out business activities in accordance with the law and social norms and actively
promotes compliance management. Striving to maximize corporate value by effectively utilizing the management resources of the Group is oneof the top priorities of management, and we have implemented measures and bolstered management systems as part of our corporate governance initiative.

Elect

Elect

Audit & Supervisory Board

Efforts to Improve Corporate Governance

The Company is a Company with an Audit & Supervisory Board.
In addition to important management decision-making and thesupervision of business execution by the Board of Directors, Audit &Supervisory Board members and the Audit & Supervisory Board,which are independent from the Board of Directors, shall audit thestatus of the execution of duties by directors. Also, to supplement
the supervisory functions of the Board of Directors, the Company
established the Nomination and Compensation Committee comprising a majority of independent outside directors. At the same time,
the Company has separated the supervision and execution of management and adopted an executive officer system to ensure evenmore prompt decision-making related to business execution.
SystemCompany with an Audit & Supervisory Board

Number of directors

8Outside directors

5

Number of Audit & Supervisory
Board members

5

Outside auditors

Year

2015–

Voluntary advisory committees
Executive officer system in place
Independent auditor

Yes
Deloitte Touche Tohmatsu LLC

Established Corporate Governance Guidelines

Make Decisions / Supervise

Executive Conference

Accounting
audit

ReportExecute Business

Audit Department

2016–

Implemented evaluation of effectiveness of the Board of Directors

2017–

Appointed an independent female outside director

2018–

Abolished the advisor position

2019–

Transitioned to a structure in which independent outside directors
comprised one-half of all directors
Decided to revise officer compensation system and introduce a
performance-linked, share-based compensation system

2020–

Appointed outside members as the majority of members on the
Audit & Supervisory Board
Appointed independent outside members as the majority ofmembers on the Board of Directors

1 yearYes(Nomination and Compensation Committee)

Transition to a structure in which outside directors comprised atleast one-third of all directors

2022–

Appointed an independent outside director as the Chairperson of
the Board of Directors

2023–

Abolished special advisors

Composition of the Board of Directors, Audit & Supervisory Board, and Nomination and Compensation Committee
Outside officers

Inside officers

Board of Directors(Chairperson: Independent outside director)

Propose / ReportManagement Committee
Execute Business

Internal
Audit

CSR Department

Propose / Report

Group Companies

Management Structure

Name

Nomination andCompensation Committee

Board of Directors

Audit

ReportReportImplemented director training

3

Term of directors

Initiative

Independent Auditor

Coordinate

Corporate Governance System (As of July 1, 2023)

Elect

Expertise and Experience
Position

Yutaka Nagao

Representative Director, Executive
Officer and President

Toshizo Kurisu

Representative Director, Executive
Officer and Vice President

Yasuharu Kosuge

Representative Director, Executive
Officer and Vice President

Mariko Tokuno

Director

Yoichi Kobayashi

Director

Shiro Sugata

Director

Noriyuki Kuga

Director

Charles Yin

Director

Tsutomu Sasaki

Full-time Audit & Supervisory Board
MemberYoshito Shoji

Full-time Audit & Supervisory Board
MemberTakashi Yamashita

Audit & Supervisory Board Member

Ryuji Matsuda

Audit & Supervisory Board Member

OutsideNomination and
Personnel/
Legal affairs/
Corporate
Marketing/
Finance/
IT/Digital/
Compensation
Labor
Risk
management
Sales
Accounting
Technology
Committee
management
management
memberGlobal(Chairperson)

Yoshihide Shimoyama Audit & Supervisory Board Member
Note: Shiro Sugata took on the role of the Chairperson of the Board on June 23, 2022.

Audit & Supervisory Board
Skills Expected of Directors and Audit & Supervisory Board Members and Reasons for Their Selection
Male

Ratio of independent outside
directors in the Board of Directors

63%

50

Nomination and Compensation Committee

FemaleYAMATO HOLDINGS CO., LTD.
Integrated Report 2023

Skills(Chairperson: Independent outside director)

Ratio of female directors

13%

Ratio of independent outside
directors the Nomination andCompensation Committee

83%

Ratio of outside Audit &Supervisory Board members

60%

Reason for Selection

Corporate management

To demonstrate appropriate decision-making and supervisory functions in the formulation and execution of Yamato’s medium- to long-term management plan to sustainably improve corporate value, extensive experience and expertise in corporate management has been selected as a necessary skill.

Marketing/Sales

To provide value that utilizes the Group’s management resources to meet the changing needs of customers and society, extensive experience andexpertise in marketing and sales has been selected as a necessary skill.

Personnel/Labor management

To become a company that respects human rights and diversity and enables employees to work with peace of mind, at the same time as ensuring that the Group’s employees, its greatest asset, are motivated and play an active role, extensive experience and expertise in human resources
and labor management has been selected as a necessary skill.

Finance/Accounting

To promote investment linked to growth potential and enhancement of capital efficiency by creating a strong financial foundation, extensive experience and expertise in finance and accounting has been selected as a necessary skill.

Legal affairs/Risk management

To become a company that is fair and trusted through safe and secure business activities in line with legal and social standards based on theGroup Corporate Philosophy, extensive legal experience and expertise and risk management capabilities have been selected as a necessary skill.

IT/Digital/Technology

To achieve the optimal allocation of management resources based on data analysis and efficient business management that fully utilizes digitaltechnology, extensive experience and expertise in IT and digital technologies has been selected as a necessary skill.

GlobalTo contribute to the innovation of customer supply chains and business processes through global business development, extensive global experience and expertise has been selected as a necessary skill.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

51

Part 3CORPORATE GOVERNANCECORPORATE GOVERNANCE

Part 3

Corporate Governance
Board of Directors

Concurrent Posts and Main Activities of Outside Directors and Outside Audit & Supervisory Board Members

Roles and duties

Evaluation of Effectiveness

The Board of Directors discusses basic policies, makes decisions, andmonitors business execution to encourage the improvement of
Yamato’s medium- to long-term corporate value.
1. T he Board of Directors shall make important decisions concerning
the Company’s business and supervise the execution of duties byexecutive directors and executive officers.
2. The Board of Directors shall recognize the medium-term management plan as one of the commitments made to shareholders andsupervise the effectiveness of strategies, such as the Company’sbusiness portfolio and the optimal allocation of management
resources, to achieve the goals of this plan. Moreover, the Board of
Directors shall sufficiently analyze the initiatives aimed at realizing
the goals of the medium-term management plan as well as theextent to which the plan’s objectives are being achieved. In addition to providing explanations to shareholders, such analyses shallbe reflected in future management plans.
3. T he Board of Directors shall encourage executive officers to demonstrate a healthy entrepreneurial spirit and to not excessively
avoid or curb risk, while at the same time establishing a framework that enables it to ensure accountability.
4. T he scope of responsibility of each executive officer shall bedecided on by the Board of Directors. Executive officers shall execute business in accordance with internal regulations.
Management
The Board of Directors takes the following into consideration whenmanaging meetings to achieve constructive discussions and exchangeof opinions, including meetings with independent outside directors.
1. T o allow Board of Directors meeting attendees the opportunity to
prepare for meetings in advance, the Board of Directors secretariat
shall send agenda items and related materials to directors well inadvance of the meeting date and provide explanations in advanceas needed.
2. T he annual schedule of Board of Directors meetings as well as
anticipated agenda items shall be decided in advance, and thisinformation shall be provided to directors and Audit & Supervisory
Board members.
3. T he number of issues to be deliberated as well as the frequencyof meetings shall be appropriately set, and the time of meetings
shall be decided so as to allow sufficient time for deliberations.
4. A
 s needed, meetings comprising Board of Directors meeting
attendees shall be held for the purpose of exchanging ideas,
thereby encouraging lively debate.

MarikoTokunoResults of Analysis and Evaluation
The composition, management conditions, and deliberation
conditions of the Board of Directors were largely appropriate asa system where the Board of Directors serves as the oversightfunction, and where a culture of attendees actively speaking up
and engaging in unrestricted discussions at the Board of
Directors meetings had taken hold

Yoichi
Kobayashi

 llow time for deliberation as a result of revising agenda items,
A
viewing meeting materials in advance, and pre-meeting briefings for the Board of Directors becoming established, andexamine points raised in those briefings before attending Boardof Directors meetings, enabling directors to make risk-based
management decisions through more in-depth discussions

Shiro
OutsideDirectorsIn addition to monthly reports from the president on the statusof business execution at Board of Directors meetings, the executive officers of operating companies regularly present issues
and medium- to long-term themes in their areas of jurisdiction
and discuss them with the Board of Directors, thereby deepening directors’ knowledge of business operations

SugataNoriyukiKuga

 he Board of Directors has continued to display an effectiveT
ness that contributes to securing sound management andachieving prompt, accurate decision-making and business execution, which are the Company’s basic policies for corporate
governance oing forward, the Company must further strengthen corporateGgovernance to improve the soundness of the entire YamatoGroup’s management while continuously working to maintainand improve the effectiveness of the Board of Directors for the
implementation of sustainable business growth strategies

CharlesYin

TakashiYamashita

The Audit & Supervisory Board and its members hold roles and responsibilities that include auditing the execution of professional duties carriedout by directors, selection and dismissal of independent auditors, and execution of authority related to auditor compensation. They makeappropriate judgments from an independent, objective perspective based on their fiduciary duty to shareholders.
Roles and duties

 utside Director ofO
Mitsubishi Materials
Corporation
Outside Director of
Shiseido Company,
LimitedMariko Tokuno comments and advises as needed on all aspects of business management, based on ample experience and extensive knowledge as a businessperson.
Accordingly, she plays an important role, drawing on her insight to provide oversightand advice from a managerial standpoint and customer and employee standpoints,
particularly regarding matters of business execution, business strategy, and HR strategy, to contribute to ensuring the transparency and appropriateness of decision-making. Furthermore, as chairperson of the Nomination and Compensation Committee,
she guides its management and has fully demonstrated supervisory functions in thedecision process for the selection of candidates for officers and the evaluation of theircompensation from an objective and neutral standpoint.

Board of Directors:
18 of 18 meetings
Nomination andCompensation
Committee: 12 of
12 meetings—

Yoichi Kobayashi comments and advises as needed on all aspects of business management, based on ample experience and extensive knowledge as a businessperson.
Accordingly, he plays an important role, drawing on his insight to provide oversightand advice from a managerial standpoint, particularly regarding matters of businessexecution, business strategy, and investment strategy, to contribute to ensuring thetransparency and appropriateness of decision-making. Furthermore, as a member of
the Nomination and Compensation Committee, he has fully demonstrated supervisory
functions in the decision process for the selection of candidates for officers and theevaluation of their compensation from an objective and neutral standpoint.

Board of Directors:
18 of 18 meetings
Nomination andCompensation
Committee: 12 of
12 meetings

 utside Director ofO
Yokogawa Electric
Corporation

Shiro Sugata comments and advises as needed on all aspects of business management, based on ample experience and extensive knowledge as a businessperson.
Additionally, he was appointed the chairperson of the Board of Directors in June 2022
and is contributing to enhancing the effectiveness of the Board of Directors by appropriately fulfilling his professional duties and responsibilities. Accordingly, he plays animportant role, drawing on his insight to provide oversight and advice from a managerial standpoint, particularly regarding matters of business execution, business strategy,
productivity enhancement, and cost structure reform, to contribute to ensuring thetransparency and appropriateness of decision-making. Furthermore, as a member of
the Nomination and Compensation Committee, he has fully demonstrated supervisory
functions in the decision process for the selection of candidates for officers and theevaluation of their compensation from an objective and neutral standpoint.

Board of Directors:
18 of 18 meetings
Nomination andCompensation
Committee: 12 of
12 meetings—

Noriyuki Kuga comments and advises as needed on all aspects of business management, based on ample experience and extensive knowledge as a businessperson.
Accordingly, he plays an important role, drawing on his insight to provide oversightand advice from a managerial standpoint, particularly regarding matters of businessexecution, financial strategy, and corporate governance, to contribute to ensuring thetransparency and appropriateness of decision-making. Furthermore, he was appointed
as a member of the Nomination and Compensation Committee on June 23, 2022. He
attended all 9 meetings since his appointment and fully demonstrated supervisory
functions in the decision process for the selection of candidates for officers and theevaluation of their compensation from an objective and neutral standpoint.

OutsideAudit &
Supervisory
Board
Members

Ryuji
Matsuda2. The full-time Audit & Supervisory Board

bers shall exercise their authority proactively

members shall attend Board of Directors

larly hold information exchange meetings forto sufficiently fulfill their role and responsibil-

meetings and other important meetings

the purpose of sharing information with out-

ities, including operational audits, account-related to the execution of business, express

side directors, thereby ensuring more robust

ing audits, and other functions, and theyreasonable opinions, hold effective Audit &gathering of information and encouraging

shall appropriately state their opinions at

Supervisory Board meetings, and ensure thatteamwork.

Board of Directors meetings as well as toinformation is shared and that members

members of senior management.

work together in a coordinated manner.

Yoshihide
Shimoyama

Board of Directors:
18 of 18 meetings
Nomination andCompensation
Committee: 9 of 9
meetings** Number attended
during tenure xecutive Chairman ofE
Worldwide City Group(Hong Kong)Chairman of China-JapanCEO Forum
Chairman of China-Japan
Asia CEO ForumCharles Yin was appointed as a director on June 23, 2022, and has attended all 14
Board of Director meetings since this appointment. He comments and advises asneeded on all aspects of business management, based on ample experience andextensive knowledge as a businessperson. Accordingly, he plays an important role,drawing on his insight to provide oversight and advice from a managerial standpoint,
particularly regarding matters of business execution and global business strategy, tocontribute to ensuring the transparency and appropriateness of decision-making.
Furthermore, he was appointed as a member of the Nomination and Compensation
Committee on June 23, 2022, and has attended all 9 meetings held in the fiscal year
under review. He has fully demonstrated supervisory functions in the decision process
for the selection of candidates for officers and the evaluation of their compensationfrom an objective and neutral standpoint.

 epresentative ofR
Takashi Yamashita CPA
OfficeOutside Director of Shin
Nippon Biomedical
Laboratories, Ltd.

Takashi Yamashita comments as needed in Board meetings, based on ample experience and professional knowledge of finance and accounting. He also attends Audit &Supervisory Board meetings and exchanges opinions at regular meetings with the representative director and president, confirming the status of the execution of duties carried out by directors, based mainly on ample experience and extensive knowledge asa certified public accountant.

Board of Directors:
14 of 14 meetings
Audit & Supervisory
Board: 18 of 18
meetings

 ttorney-at-Law ofA
Matsuda Law Office

Ryuji Matsuda comments in Board meetings as needed, based on ample experienceand professional knowledge of finance and accounting and as a lawyer. He also
attends Audit & Supervisory Board meetings and exchanges opinions at regular meetings with the representative director and president, confirming the status of the execution of duties by directors, based mainly on ample experience and extensive
knowledge as a lawyer.

Board of Directors:
18 of 18 meetings
Audit & Supervisory
Board: 18 of 18
meetings

 utside Audit &O
Supervisory Board
Member of NIPPONHUME CORPORATION

Yoshihide Shimoyama comments as needed, based on ample experience in management and auditing. He also attends Audit & Supervisory Board meetings andexchanges opinions at regular meetings with the representative director and president,
confirming the status of the execution of duties by directors, based mainly on ample
experience and extensive knowledge as a manager and an outside Audit &Supervisory Board member.

Board of Directors:
18 of 18 meetings
Audit & Supervisory
Board: 18 of 18
meetings

3. The Audit & Supervisory Board shall regu-

1. T he Audit & Supervisory Board and its mem-

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

Attendance atmeetings during the
fiscal year ended
March 31, 2023

Concurrent posts

 more well governed structure since outside directors make up
Amore than half of the directors and Audit & Supervisory Board
members and an outside director was appointed as chair of theBoard in June 2022

Audit & Supervisory Board

52

Overview of reasons for appointment and expected roles

Name

To verify the effectiveness of the Board of Directors, the Company
surveys all directors and Audit & Supervisory Board members on anannual basis regarding the composition and operational status of theBoard of Directors. The Company carries out an evaluation on the
Board’s effectiveness in terms of such matters as the condition of
the Board’s operation and the state of deliberation held at Board
meetings. In addition to the survey, the chair has begun performinginterviews to further enhance the usefulness of the evaluation.

Board of Directors:
14 of 14 meetings
Nomination andCompensation
Committee: 9 of 9
meetings** Number attended
during tenure

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

53

Part 3CORPORATE GOVERNANCECORPORATE GOVERNANCE

Part 3

Corporate GovernanceNomination and Compensation Committee
The Nomination and Compensation Committee comprises five independent outside directors and one inside director, with an independent outside director acting as chairperson. As an advisory body to the Board of Directors, the committee shall deliberate particularly on the details ofimportant matters pertaining to nomination and compensation, and present the results of these discussions to the Board of Directors in aneffort to enhance management transparency.
Roles and duties
1. T he committee shall deliberate on matters related to the appointment or dismissal of directors, Audit & Supervisory Board members, and executive officers on the basis of business performanceand multifaceted observations and evaluations, verify the validityof such decisions, and present the results to the Board of
Directors.
2. T he committee shall deliberate policies for determining compensation, such as for directors and executive officers, and the details
of individual compensation, verify the validity of such decisions,and present the results to the Board of Directors.
3. The committee shall propose several candidates to the Board of
Directors, including candidates recommended by the serving representative to the Board of Directors, as successors to the representative director to the Board of Directors, following deliberation by
the committee based on multifaceted observations and evaluations of candidates’ track records, human nature, and other factors.

Key Discussion Items for the Nomination and Compensation
Committee in the Fiscal Year Ended March 31, 2023
Related to Nomination
 eappointment of candidates for directors
R
Criteria for assessing the independence of people selected
to be outside directors
Definition of personnel requirements and nomination process of candidates for president
Related to Compensation
 stablishment of missions for inside director compensationEDecision on performance-linked compensation
Decision on compensation and other remuneration for
individual directors

Remuneration of Directors and Audit & Supervisory Board Members (Fiscal Year Ended March 31, 2023)

Directors and Audit & Supervisory
Board members

Total amount of
remuneration(Millions of yen)

Director(Of which, Outside Directors)
Audit & Supervisory Board Members(Of which, Outside Audit &Supervisory Board Members)
Total(Of which, Outside Officers)

449
(76)
81

Total amount of remuneration by type (Millions of yen)
Medium- to
Of the left,
Short-termlong-term
non-monetary
Basic remuneration performance-based
performance-based
remuneration, etc.
remuneration
stock compensation*

Number ofrecipient Directors
and Audit &Supervisory Board
Members

299
(76)
81

108
(—)
—

41
(—)
—

41
(—)
—

12
(6)
6

(33)

(33)

(—)

(—)

(—)

(3)

530
(109)

380
(109)

108
(—)

41
(—)

41
(—)

18
(9)

* The amount of expenses recorded for share delivery points during the period.

Policy for determining compensation of directors and Audit & Supervisory Board members
1. B asic policy
The Company’s compensation for directors is determined based on the following factors.
A competitive level of compensation
 rovide rewards according to roles andP
responsibilities, as well as performance,and set compensation at an adequatelevel to secure talented human resources

A compensation system emphasizing theimprovement of corporate and shareholder valueL ink compensation to business performance so as to motivate directors toachieve performance goals
Establish a compensation composition
that promotes the sharing of common
interests with shareholders by linking it
to corporate value over the medium tolong term

2. Compensation structure
The Company’s compensation for directors consists of basic compensation (fixed compensation), which takes compensation levels
at other companies and other such factors into consideration;short-term performance-linked compensation (variable

54

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

A fair and equitable compensation system nsure that the process for determiningE
compensation is objective and highly
transparent

compensation); and medium- to long-term performance-linked,
share-based compensation (variable compensation). In addition,compensation for Audit & Supervisory Board members and outside directors consists exclusively of basic compensation due tothe nature of their functional roles.

3. Timing of delivery and conditions
The Company pays its basic compensation (fixed compensation)and short-term performance-linked compensation (variable compensation) as monetary sums on a monthly basis, encompassing
twelve equal installments annually. Medium- to long-term performance-linked, share-based compensation (variable compensation)is granted once a year in June in the form of points. Points accumulated up to retirement are paid out, with one point equaling
one share, at the time of retirement in accordance with regulations for director share benefits.
4. Decisions on compensation and other remuneration for
individual directors
Based on the policy for decisions resolved by the Board of
Directors, the Nomination and Compensation Committee, which
is chaired by one of the independent outside directors who constitute a majority of its membership, conducts further deliberations regarding amounts of compensation and other remuneration
for individual directors, along with details regarding the calculationof such amounts to assess each of the directors, while taking factors such as Companywide business results into consideration.
Based on the findings, the Board of Directors decides on theamount of basic compensation (fixed compensation), short-term
performance-linked compensation (variable compensation), andmedium- to long-term performance-linked, share-based compensation for each individual.
5. Other
A certain percentage of the monetary compensation shall beallocated to the purchase of shares of the Company through the
Officers and Executives’ Shareholding Association. Furthermore, torealize a highly objective and transparent process, the Nomination
and Compensation Committee met 12 times in fiscal 2022 andconducted further discussions on the details of compensationand other remuneration for individual directors, based on the decision-making policies for such compensation as activities for thecommittee in the decision process for the fiscal 2022 individualcompensation for directors. The Board of Directors determines theamount of compensation based on the results of these discussions.

performance and also to achieve greater transparency andobjectivity.
The Company has calculated the annual amount of performancelinked compensation based on these results and then converted
that result to a monthly amount, which is applied to the period
extending from July 2022 through June 2023.
 ormula for Calculating Short-Term Performance-Linked
F
Compensation
Variablecompensation

Performance indicatori)	Group consolidated
operating revenues
Shortii)	Group consolidated
term peroperating profit
formancebench- iii)	Group consolidated
profitmarksiv)	Evaluation of mission(individual)

Increase inratio ofvariablecompensation

Mediumto longterm
performancebenchmarks

Performanceindicator

Detailsi) ROE—ii) TSR

Relative TSR
Comparison
with Total
Return TOPIX
TSR

Indicator
rate oneach
director

30%
30%
30%

Actual(Billionsof yen)Target(Billionsof yen)Achievementrate

1,793.6

1,815.0

98.8%

77.2

95.0

81.3%

56.0

53.0

105.6%—

10%

Indicator
rate oneach
director

40%

30%

ActualTargetAchievement
rate

9.6%

10%

96.0%

77.1%
(Dividend
includesTOPIX
102.0%)

100%

75.6%

(2.0)%

(3)%

66.7%

Single year
targets for
GHG
emissionsiii)	ESG
indicators

Note: -3%
comparedwith the fiscal

20%year ended
March 31, olicy for Determining Performance-Linked CompensationP(Variable Compensation)
The standard amount for short-term performance-linked compensation (variable compensation) is set in terms of the ratio of basic compensation (fixed compensation) in accordance with rank and title.
Following this, the amount paid out to individuals is determinedwithin a range of 0% to 150% in line with the achievement rate for
Yamato’s performance benchmarks and the evaluation of individual
missions. Furthermore, the performance benchmarks comprise Group
consolidated operating revenues, Group consolidated operating
profit, and Group consolidated profit attributable to owners of parent.
The standard amount for medium- to long-term performance-linked,
share-based compensation (variable compensation) is set in terms of
the ratio of basic compensation (fixed compensation) in accordancewith rank and title. Following this, the amount paid out to individuals
is determined within a range of 0% to 150% in line with the achievement rate for Yamato’s performance benchmarks and the evaluationof individual missions. Furthermore, the performance benchmarks
comprise ROE, total shareholder return, and ESG indicators. The
amount of medium- to long-term performance-linked, share-based
compensation (variable compensation) is paid out as points, whereby
one share equals one point for each fiscal year, dividing the standard
amount by the average of the closing prices of the Company’s sharesat the Tokyo Stock Exchange in the month preceding the fiscal year inwhich the medium-term management plan starts.
The Company uses the above as a benchmark for performancelinked compensation to better link compensation to corporate

2021iv)	Mediumto longterm
targets forinnovation
activities

Evaluationof mission(individual)—10%

 ompensation ratio for directorsC(excluding outside directors)(%)

2022/3

65

35

Increase in ratio of variable compensation
2023/360

29

11

Basic compensation
70%(variable compensation)
Performance-linked compensation
Short-term performance-linked compensation (variable compensation)
Medium- to long-term performance-linked, share-based compensation(variable compensation)

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

55

CORPORATE GOVERNANCECORPORATE GOVERNANCE

Part 3

Part 3

Corporate GovernanceSupport Framework for Directors and Audit & Supervisory Board Members

Policy on Cross-Shareholdings

The Company shall establish a support framework enabling the constant provision of information that allows directors and Audit & Supervisory
Board members to effectively fulfill their roles and duties.

1. T he Company shall establish a support framework that enables it
to provide necessary and adequate information at the necessary
time to allow directors to effectively fulfill their roles and duties.
2. B
 y participating in key business strategy meetings for the overall
Group and by observing key Group business sites, including thoseoverseas, participants are able to confirm business strategies andtheir promotion and provide opportunities for proactive involvement in business activities.
3. A
 s a system to help Audit & Supervisory Board members smoothly
perform their duties, employees in the internal audit department
shall be appointed to assist Audit & Supervisory Board members
and ensure a support system.
4. A
 udit & Supervisory Board members shall exercise their authority
to perform investigations in accordance with the Companies Act.

In addition, if a director or employee discovers a fact that could
potentially inflict marked damage on the Company, they shallimmediately report this fact to an Audit & Supervisory Board
member, even if there is no request to do so from an Audit &Supervisory Board member.
5. If a director or Audit & Supervisory Board member believes it tobe necessary, they shall obtain advice from an outside expert at
the Company’s expense.
6. The internal audit department shall regularly hold meetings withthe full-time Audit & Supervisory Board members and provide
audit reports in a planned manner to the Board of Directors andthe Audit & Supervisory Board, thereby enhancing the provision of
information to, as well as bolstering coordination with, outside
directors and outside Audit & Supervisory Board members.

Improvement of Corporate Value Through Dialogues with Shareholders and Investors

The Company has a policy of owning stocks that are deemed meaningful based on comprehensive consideration from a medium- tolong-term perspective of the relationship with the Group’s businesses, the profitability, and the potential for creating new business
opportunities, among other factors. A decision shall be made every
year at the Board of Directors meeting concerning whether to continue holding the stocks based on careful consideration of various
factors, including previous business transactions with the Company
and the market price of the shares, after verifying the benefits andCompliance
Strengthening internal control for the Group overall
The Yamato Group has established an internal control system inorder to promote a sound corporate culture in the Group as a whole
and to enable employees to perform their duties effectively and efficiently without any misbehavior or mistakes. Having stipulated its
basic policy on the internal control system in accordance with theCompanies Act, each Group company is working on strengthening
internal control.

Basic policy
To continuously improve medium- to long-term corporate value through dialogues with shareholders and investors, we are striving to enhance IR
and SR activities by creating a structure focused on the Executive Officer Responsible for IR. When promoting IR and SR activities, we ensure sufficient opportunities for dialogue with executive officers, including the president, and independent outside directors to fully understand the
management strategies and businesses of our shareholders and investors. Additionally, the opinions and requests received from shareholders
and investors through dialogues and other means are fed back to the Board of Directors as necessary to share awareness of issues within the
Company from an objective perspective.
Implementation of Engagement Activities (Fiscal Year Ended March 31, 2023)
Details of Activities
Settlement of accounts meetings
Small meetings
Briefings to explain structural reform of network operations

Responders

4

President and responsible Executive Officer

2

Independent outside directors

1

Responsible Executive Officer

1

Briefings related to sustainability (environment)

Responsible Executive Officer

1

Visits to overseas investors (Europe, Americas, and Asia)

President and Executive Officer Responsible for IR

4

Individual dialogues (One on one)President, Executive Officer Responsible for IR, and representative of IR department*345* Responds based on shareholder and investor requests and purpose of interviews

Key Themes and Points of Interest in Dialogues
 rogress of Group management structure reforms and businessPstructure reforms
 pecific details and creation effects of structural reform ofS
network operations
Strategies for expanding corporate business domain urrent status and future outlook for business environmentCand competitive environment
 ricing policy based on 2024 problem and rising costs,Psuch as fuel isks and opportunities following climate change andRconnection between reducing GHG emissions and improving
corporate value
 urpose of human resource strategies in conjunction withP
structural reforms and human resource managementEffectiveness of the Board of Directors
Measures for capital policies and shareholder returns

56

Number of Times

President and responsible Executive Officer

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

Enhancement of Details Disclosed Based on Dialogues(Examples) inancial Results Meeting Materials
F(Fiscal year ended March 2023)
 he timelines of progress with structural reforms and conT
nection to each measure (page 4)
 isclosure of cost trends in each domain of operation
D(page 27)

risks associated with holding the stocks from a quantitative andqualitative perspective. The Company works to reduce the numberof stocks it owns that are deemed to be of little significance.
In exercising the voting rights of shares held, the decision to support or oppose agenda items at the shareholders’ meeting shall bemade on a case-by-case basis according to Yamato policy, with consideration given to the issuing company’s enhancement of corporate
value, the issuing company’s compliance framework, and the possibility of a negative impact on the Group’s business, among other factors.

We have also established a system to carry out evaluations in linewith our internal control report system pursuant to the Financial
Instruments and Exchange Act and immediately put improvements
in place should there be any shortcomings. Furthermore, we prepareinternal control reports on financial reporting and receive an audit of
the internal system by independent auditors.
Internal control over the financial reporting of the Yamato Groupas of March 31, 2023, was considered valid, and an internal control
report was submitted to the Kanto Local Finance Bureau.

Enhancing the whistle-blower system
The Yamato Group has established a whistle-blower system topromptly discover and appropriately respond to law and/ or internal
regulation violations. In addition to compliance-related issues, suchas overall corruption (including bribery) and human rights violations(including bullying and harassment), the whistle-blower system
accepts reports on any action that violates internal regulations andthe Group’s Management Philosophy. We have established a suggestions box as a contact point with the president, a compliance hotline as the secretariat for the Compliance and Risk Committee, anda corporate fraud point of contact manned by external lawyers,which all take correspondence via email, telephone, and letter. In
addition, from February 2019 we established individual points ofcontact at each Group company as a familiar place for consultation.
To spread awareness among employees, we display posters introducing these points of contact with the president’s photograph onthem at each office. Additionally, the Group’s whistle-blowing regulations protect the privacy of whistle-blowers and ensure that they do
not suffer any unfair treatment as a result of making a report.
Accordingly, we are developing an environment that ensures employees who wish to remain anonymous can also utilize this service.
When a report is made on an issue, the whistle-blower system
works to promptly confirm the facts, enact the necessary response
and corrections, and promote measures to prevent a reoccurrence.
Specifically, we promote concrete, response procedures, processing
methods, and risk-assessment criteria that are shared on aGroupwide basis. This enables us to prevent the overlooking ofmajor risks by adopting a consistent management flow andresponse to all reports received. Furthermore, by clarifying the persons responsible for decision-making at the time reports arereceived and unifying relevant standards, we are improving our levelof risk awareness.
We prevent the reoccurrence of issues by formulating rules forholding verification meetings internally to ensure that we carry out
an appropriate investigation and response. Additionally, we implement the standardized management of whistle-blowing informationand the details of responses on a Groupwide basis, thereby allowing
us to ascertain Groupwide trends and share examples of actual
cases in a cross-organizational manner. Such information and details
are reported regularly to the Board of Directors, helping to facilitate
improvements across the Group.
2023/3 Results
Number of whistle-blower cases

751 (117 more than 2022/3)

Note: The Compliance and Risk Committee meets each quarter at Yamato
Holdings and every month at Group companies, including Yamato
Transport.

 isclosure of human resource strategies and KPIs in conD
junction with structural reforms (page 12)
 rganize basic policies for climate change and connectionO
to value creation (page 13)	https://www.yamato-hd.co.jp/english/investors/library/briefing/2023.html

Briefings for each theme
Structural reform of network operations
Sustainability (environment)	https://www.yamato-hd.co.jp/english/investors/library/business_briefing/

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

57