Introduction
Value Creation Story
Business Strategy
Foundation For Value
CreationGovernance
53 Features of IDEC’s Governance

Governance

55 Efforts to Evaluate EffectivenessNominating Committee and56 Remuneration Committee
59 Director Profiles
60 Executive Officers

61 Interview with Outside Directors
Data

63 Outside Director Activities
64 Risk Management

IDEC Report 2023

52

Introduction

Governance
A commitment to effective governanceFor further information, pleaserefer to the “Governance” of theIDEC sustainability website.

The IDEC Group is further enhancing its governance system toensure management transparency and effectiveness on behalfof its shareholders and other stakeholders.

Value Creation Story

Business foundation

Related materialities

https://us.idec.com/idec-us/en/
USD/sustainability/governance

Major sustainability KPIs (FY2025)

 urther strengthen governance and complianceF
to ensure that the company is trusted by society.

 umber of items with below average scores in the Board of Directors’
Neffectiveness assessment 20% or less
Number of serious legal violations 0

Outside directors represent more than half of all directors,
and all of them are independent officers

Insidedirectors

4

The effectiveness of the Board of Directors has been

3 continuously evaluated since FY2016(As of June 30, 2023)(As of June 30, 2023)

Outsidedirectors

Maledirectors

67

Ratio ofoutside
directors

60 %Outside directors actively participate in outside directors’

4 exchange sessions and other events

Time as director

Ratio of female directors(As of June 30, 2023)

Femaledirectors

10 yearsor more32

Ratio of lessthan 3 years

3-9 years

40 %Ratio offemale
directors

30 %less than 3years

44Foundation For ValueCreation

12 Females make up 30% of the Board of DirectorsRatio of outside directors

Business StrategyFeatures of IDEC’s governance

General Meeting of Shareholders
Appointment / Dismissal

IDEC Report 2023

Reporting(excluding Audit &Supervisory Committee members)

Remuneration Committee(Majority being outside directors)

Audit &Supervisory
Committee

Accounting
AuditorReportingAppointment of representative directors by the Board of Directors

Executionof BusinessDirectors(Audit & Supervisory
Committee members)

Appointment / Dismissal

Auditing by the Audit & Supervisory Committee

Top Management Meeting

Accounting auditing

Internal
Auditing Dept.

CEOExecutive Officers’ Meeting

CSR CommitteeVarious committees

Various departments / Group companies

DataThe basis of the IDEC Group’s corporate governance is to ensure
management transparency and effectiveness for the sake ofshareholders and other stakeholders. For this reason, we assign
outside directors and separate the management supervisory
function from the executive function so as to always maintain ahigh priority on transparency and effectiveness.
Guided by these principles, we formulated and issued theIDEC Corporate Governance Policy to improve our corporate
value in line with “The IDEC Way,” which was established in2019. We are taking action under this policy to further strengthen
our governance practices so that we can govern our company
more effectively.

(Majority being outside directors)

Appointment / Dismissal

Board of DirectorsDirectorsGovernance

IDEC Corporate Governance Policy

Nominating Committee

Cooperation
Instructions / Reporting
Auditing

Governance53

GovernanceIn the interest of maintaining its financial health, the IDEC Group
does not, in principle, hold shares in other companies except
when there is a rationale for doing so.
A rationale for cross-shareholding exists when the Board ofDirectors has decided that a particular case of cross-shareholding
promises to increase the IDEC Group’s corporate value by realizing
synergies and improving both sides’ competitive advantages in
the market. Such decisions must be based on a validation of
the profitability of the cross-shareholding relationship that duly
examines the risks, costs, and returns involved from a medium
to long-term perspective, and must comprehensively consider
the intended aims, such as maintaining and strengthening abusiness relationship or establishing a capital or business alliance.

Timeline

Board of Directors composition

60 %30 %67%

33%

67%

11%

70 %

10 %

57%

14%

Augmented areas of expertise

based on skills matrix
Audit & Supervisory
Committee members

Increased number of female

June 2022

directors
Established a voluntary

Remuneration Committee

June 2021

June 2018

June 2016

Audit & Supervisory
Committee members

Established a voluntary

Nominating Committee

Audit & Supervisory
Committee members

Transformed into a Company

with an Audit & Supervisory
Committee

Audit & Supervisory
Committee members

Established IDEC Corporate

Governance Policy

InsideIDEC Report 2023

MaleFemale

OutsideMaleFemale

Constructive dialogue with shareholders,investors, and analysts
We proactively engage with our shareholders and investors togain their confidence in and fair evaluation of our management,with the aim of facilitating the IDEC Group’s sustainable growthand improving its corporate value over the medium to long-term.
This includes diligently responding to requests for interviews fromshareholders and individual and institutional investors. Informationacquired from those interactions, including appraisals and opinions
concerning markets, is regularly reported to the Board of Directors.
In FY2023, we received the opinions of shareholders andinvestors on matters such as the activities of outside directors,
the efforts of the Nominating Committee and Remuneration
Committee, training of next-generation executive candidates,and our environmental initiatives. These opinions were shared
as feedback with the Board of Directors, and we are taking
concrete action to address them, while working to further expand
disclosure. We are also continuing to enhance investor relations
tools such as our Shareholder Newsletter and website to betterhelp shareholders and individual investors make informed
investment decisions. At the same time, we proactively disclose
our financial results, management strategy, and sustainability
actions, and publish news and features on various topics.

Governance

Data

Ratio of female directors

GovernanceRatio of outside directors

To ensure the credibility of our Group’s financial reporting, wehave established the Internal Control Policy on Financial Reportingand clearly defined our Group-wide system for implementingthat policy, in line with standards for assessing internal controls
on financial reporting. We have also created a framework forcontinuous self-auditing by divisions and Group companies andindependent monitoring by the Internal Auditing Department.

Foundation For Value
Creation

June 2023

Features and institutional design

Internal control system

Business Strategy

The IDEC Group has separated the business executive function
and the supervisory function of the management in order torealize efficient corporate management, and has proactively
appointed outside directors since early on. In 2016, the IDEC
Corporate Governance Policy was established to set forth andcommunicate our views on governance and our operating policy.
In June 2018, we transformed into a Company with an Audit &Supervisory Committee. We established a voluntary Nominating
Committee in 2021, and a Remuneration Committee in 2022.
We have ensured that outside directors constitute themajority of all directors since 2016. Today, the Board of Directors
is a diverse body made up of men and women with different
backgrounds and areas of expertise.

Furthermore, the Company regularly validates the significanceof existing cross-shareholdings in light of various criteria, including
the purpose of holding those shares. If a particular case of crossshareholding is determined to be inappropriate, the shares are soldoff after taking into account diverse considerations such as the impact
on the Company and the market, and the issuer’s financial strategy.

Value Creation Story

Policy for cross-shareholding

Introduction

Evolution of governance54