Proxy
VotingPromoting the transition to monitoringboards through disciplined proxy voting

77

Responsible Investment Report 2023

The Unique Aspects of
Our proxy Voting

1

Systematic and ongoing efforts
to influence companies

2

Effective and robust process

3

High level of accountability

4Standards for actions beyond
simple opposition

Along with engagement, we aim to realize
desirable management styles.

Thorough discussions by the Responsible
Investment Committee + real-timemonitoring of conflicts of interest by the
Responsible Investment Council.

We disclose the reasons for voting infavor of or against all proposals. We givedetailed reasons for proposals requiring
special explanation.

Introduced standards to not only oppose a
proposal in the case that initiatives are lagging
in progress, but also to encourage averagecompanies to aim for higher standards

Proxy Voting
The Outline of Proxy Voting
In proxy voting, we focus on the corporate governanceof portfolio companies. The basic structure of corporate
governance is that directors and auditors are elected
at a shareholders’ meeting, and directors (the board of
directors) and auditors supervise senior management
through nominations, compensation matters, and audits.
Accordingly, the following three aspects are particularly
important in proxy voting: the election of directors(nomination), executive compensation (compensation)and the election of auditors (audit). In addition, theappropriation of surplus is important when it comes toJapanese companies because Japanese companies
are often criticized for retaining a large amount of cash
and deposits and being unwilling to return profits toshareholders through dividends and share buybacks.
Moreover, proposals submitted by shareholders havealso been increasing in recent years. Due to differences inlegal systems, it is easier to make shareholder proposals
in Japan than in Europe and the United States, andthese proposals can often have a direct impact on the
management of companies. Accordingly, these proposals
must be considered carefully.
We regard proxy voting as part of our engagementwith portfolio companies, and we make judgments on
proposals by all portfolio companies in accordance with
our own proxy voting guidelines.
The four points noted in page 77 are unique aspects ofour proxy voting.

Basic Corporate Governance Structure
Shareholders’ meeting
Election

Directors (Board of Directors) / Auditors
Oversight(nomination, compensation, audit)

Senior management

System to Manage Conflicts of Interest
Members of the Responsible Investment Committee, thehighest decision-making body, include, in principle, only
persons involved in investment and research decision
making, while people in a position with a conflict ofinterest or people with the possibility of acting on behalfof such persons are excluded. In addition, under the
Audit and Supervisory Committee, we have establisheda Responsible Investment Council comprising only
the Chief Conflict Officer and persons in independent
positions in our company, including independent outside
directors. This Responsible Investment Council monitors
the Responsible Investment Committee’s decisions aswell as its overall management. This council monitors
stewardship activities, especially proxy voting involving
conflicts of interest, to make sure that decisions are madethat do not adversely affect the interests of clients as aresult of conflicts of interest.

As required, the Responsible Investment Council
recommends improvements to the Executive Management
Committee and/or the Responsible Investment
Committee, and reports on this to the Board of Directors

Nomura Asset Management’s System toManage Conflicts of Interestand the Audit and Supervisory Committee. Furthermore,members of the Responsible Investment Council attend
Responsible Investment Committee meetings, and areable to immediately state their opinions.
Responsible Investment Committee

Responsible Investment Council
Chair

Members

Secretariat

AttendCCO*

Independent outside directors and others

Responsible Investment
Department*Chief Conflict Officer

78

Proxy Voting Process for Japanese Equities

Proxy Voting Process for
Global Equities

The proxy voting process is as shown in the figure below. The process for proposals that can be judged in accordancewith the proxy voting guidelines (proposals that do not require qualitative judgment) is different than the process forother proposals (that do require qualitative judgment).
As with other portfolio companies, we make decisions about whether to support or oppose proposals for groupaffiliates based on our guidelines. As a proposal with a conflict of interest, the Responsible Investment Committee will
discuss the proposal referencing the opinions of multiple proxy voting advisory firms. Members of the Responsible
Investment Council attend the Responsible Investment Committee meeting and participate in the deliberations. Also,
following the conclusion of the Responsible Investment Committee meeting, the Responsible Investment Council holdsa meeting where it closely examines the issue from the perspective of conflicts of interest.

For proxy voting (excluding Japanese equities), we
generally decide to vote for or against a proposal inaccordance with our Global Basic Policy on Proxy Voting.
However, if investment managers and analysts with adeep understanding of local conditions determine it to benecessary, we may, upon deliberation, make a decisionthat differs from the basic policy on proxy voting. The final
decision is shared with all offices, and proxy voting is thencarried out uniformly on a global basis.

Secretariat

Responsible Investment
Committee

Responsible
Investment Council

Members*1
Responsible Investment
Department

Seven people including those
responsible for investment and research(The Responsible Investment Council
members participate in Responsible
Investment Committee meetings)

Global Basic Policy for
Proxy Voting

Chief Conflict Officer Outside: 1
directors: 2
Outside experts: 1

Role

Preparation of proposals

Share

Reviews from the perspective of conflictsof interest Advises the Executive
Management Committee and/ or the
Responsible Investment Committee tomake improvements as required andreports to the Board of Directors and the
Audit and Supervisory Committee

Discuss

EuropeFormulationof theguidelines

Qualitative
judgment notnecessary

Decidewhether toagree oropposeQualitative
judgment isnecessary

Decidewhether toagree oropposeProposal judging process

Process of
formulating proxyvoting guidelines

No conflicts ofinterest

Qualitative
judgment isnecessary*2

Decidewhether toagree oropposeThere is a conflictof interest*1 As of the end of December 2023
*2 This includes proposals of group affiliates.

79

Holds deliberations and makes
decisions based on the secretariat’s
proposals Makes revisions to thesecretariat’s proposals as required

Responsible Investment Report 2023

Reference

Opinions from multiple
proxy voting advisory firms

Discuss

Considering local
circumstances, makedecision different
from the policy ifnecessary

Asia

Tokyo

Discuss

USA

Discuss

Share final decision

Globally-uniform
proxy votingChanges in Resultsof Exercise of Voting
Rights for JapaneseCompanies (calendar year)
Total Company proposals
The ratio of votes against is
shown in the chart below.
See details on the right.

Number of
proposals

10.6%

7.6%

8.3%

8.5%

23,87723,89424,70023,653

2020

2021

2022

2023

Proposals on company organizational structure
Our ratio of votes against proposals increased in 2023. The main reasonsfor this were that in November 2022 we introduced a standard to voteagainst a proposal if there were no female directors as well as a standard
that we would vote against a proposal if the number of cross-shareholdings
was particularly high, and raising the threshold for performance standards.

Election anddismissal of directors

Election anddismissal of auditor

10.1%

12.8% 13.3% 13.3% 11.7%

5.8%

6.8%

8.1%

Number of 17,959 18,429 17,924 18,337
proposals

Total Shareholders’ proposals
The ratio of votes for isshown in the chart below.
12.7%

Number of
proposals

9.8%

19.2%

9.5%

236

174

315

453

2020

2021

2022

2023

Our ratio of votes supporting proposals increased in
2023. The number of proposals increased, centeredon proposals related to articles of incorporation andthe election and dismissal of directors, and we voted
for proposals in cases where we confirmed that theywould increase shareholder value and/or bolster
governance.

2020

2021

Main reasonsfor voting in
opposition

2022

Number of 2,589
proposals

1,811

1,539

2,197

2020

2021

2022

2023

2023

Unable to confirm the independence of outside officers
A lack of female directors
Insufficient number of outside directors

The opposition ratio in 2023 has increased. The main reason for thiswas the increase in requirements related to remuneration governance inNovember 2022.

Payment of retirement
benefits to retiring
executives

Executivecompensation*1
24.0% 23.7%

Number of
proposals

85.5% 78.0%

18.8% 20.2%

826

1,087

945

736

2020

2021

2022

2023

Number of
proposals

76.7%

Results of Proxy Voting for Global Companies
January-December 2023
Shareholders’proposals

Total

Votes for16,468419

16,887

Votes against

1,555

251

1,806

Ratio of votes
against

8.6%

37.5%

9.7%

* In addition to the above, in 2023 we voted on 78 proposals
related to the election and dismissal of accounting auditors, andthree other miscellaneous proposals. We voted against 0% forof these proposals.
*1 R evisions of executive compensation amounts, issuance ofstock options, introduction/revision of performancelinked
compensation plans, executive bonuses, etc.
*2 M
 ergers, business transfers/assumptions, shareexchanges, stock transfers, company splits, etc.
*3 Share buybacks, reduction in statutory reserves, capitalincreases via third-party allotment, capital reductions,share mergers, issuance of class shares, etc.

94.5%

165

123

120

73

2020

2021

2022

2023

 ecipients and conditions of stock compensationR
were inappropriate
Compensation governance not in place

Main reasonsfor voting in
opposition

Proposals on capital policies (excluding proposals on articles of incorporation)
In 2023, our opposition ratio increased for dispositions of surplus and decreased for other capital policies. The main reason for the former is that from
November 2022 we raised the ROE level required in our standard for the disposition of surplus. Regarding capital policies, the main factor was that there
were fewer proposals for which we had concerns from the perspective of protecting the interests of minority shareholders. Please also refer to examples ofreasons for our voting for and against proposals on Page 85.

Appropriationof surplus
5.0%

Organizational
restructuringrelated*2

Introduction, update
and abolition of takeover
defense measures

14.0% 14.3%

5.4%

3.3%

7.9%

Other capital policies*3
13.0%

100% 96.5% 100% 100%

9.8%

6.8%

9.0%
1.5%

0.6%

Reference

Company
proposals

Proposals on executive compensation(Ratio of votes against, same as below)

Number of 1,548
proposals

1,500

1,502

1,472

2020

2021

2022

2023

Main reasons forvoting in opposition

Number of
proposals

38

61

43

35

2020

2021

2022

2023

Number of
proposals

92

57

63

82

2020

2021

2022

2023

Cash-rich, low capital efficiency, and insufficient shareholder returns
Introduction/update of takeover defense measures

Number of
proposals

59

100

77

68

2020

2021

2022

2023

Insufficient protection of minority shareholder interests

Proposals on articles of incorporation
3.3%

3.0%
1.7%

Proposals on articles
of incorporation
Number of
proposals

1.0%

Main reasonsfor voting in
opposition

530

630

2,402

572

2020

2021

2022

2023

 oard of directors’ authorization of dividends that doBnot satisfy conditions
Reverse progress on separation of Chairman and CEO

80

Overview of Proxy Voting Standards for Japanese Companies
We have established a Global Basic Policy for Proxy Voting, and, for Japanese companies, we apply the Proxy VotingStandards for Japanese Companies established in accordance with this policy. The outline of this is below, and pleaserefer to our website for details.
Reference

Proxy Voting Guidelines Structure
Global Basic Policy for
Proxy Voting
Proxy Voting Standards forJapanese companies

Application
to Japanesecompanies

https://www.nomura-am.co.jp/special/esg/responsibility_investment/vote.html (Japanese only)

Key Point

Escalation*1
Rigorously judge
corporate actions,transactions involving a
conflict of interest, andresponsibility taken foroutcomes

Board of Directors
Composition

Thinking

We may vote against a company proposal in the cases below (Items in bold text were revised in November 2023)

Reflect the results of engagement targeting the realizationof desirable management (refer to Pages 19-22)

If a portfolio company has not made adequate efforts and improvements are not expected despite the fact that during
engagement we pointed out that efforts to realize desirable management were insufficient and urged action.

Judgment made and the responsibility taken to deliver
business results by the management and the board of
directors will be scrutinized and rigorously judged.

If actions that significantly damage shareholder value (misconduct, etc.) are found(New: from November 2024) For companies in the TOPIX100, if initiatives are clearly insufficient (refer to Page 82)
If ROE is slumping. In the case of a monitoring board (please refer to page 24), if ROE is stagnating and there is no effort
being made to improve management (business performance standard)If cross-shareholdings are particularly large
If a financially-sound listed subsidiary with a large amount of net financial assets is lending money to the parent company
If minority shareholders’ interests are not protected in M&A, etc.

In order to oversee the management team, the board of
directors must comprise an appropriate number of people
and possess diversity and independence.

( New) When the number of directors is less than 5 or more than 20
If the number of outside directors falls below the minimum level (below)
Until October 2024: 1/3 for companies without a controlling shareholder. However, for companies with a controllingshareholder, a majority.
From November 2024: A majority. However, 1/3 if a company has no controlling shareholder and has
nomination governance in place*2.
If there are no female directors
In a company with a board of corporate auditors, the term of office for directors is two years

Independence andEffectiveness of Boardof Directors

Highly-independent outside directors are required toeffectively oversee the management team.

If the term of office of an outside director is 12 years or more, if the notification as an independent director is notconfirmed, or if the outside director has worked for a company that is a major shareholder
Attendance at board meetings is less than 75%
When it is clear that they have not fulfilled their expected roles, such as the selection and dismissal of senior
management or the supervision of conflicts of interest between the company and its management, controllingshareholders, etc

Appropriatecompensation
governanceBecause the process for determining executive
compensation must be transparent, there must be
appropriate supervision (compensation governance).

If, for a company that does not have compensation governance in place*2, there is a proposal on the agenda
related to executive compensation or executive retirement benefits (Pre-revision: only applicable to these
proposals above a certain level)

Appropriate incentives

Although stock compensation is important as amanagement incentive, it can be counterproductive if notproperly designed.

 he stock compensation is designed so as to encourage the management team to be short-term oriented
TThe persons to whom stock compensation is given are not appropriate
The stock compensation could lead to excessive dilution

Effective utilization offinancial assets

It is essential that financial assets are utilized effectively
to enhance corporate value.

Financial assets are not utilized effectively, and shareholder returns (dividends and share buybacks) are not appropriate*1 Measures taken to bolster involvement with a portfolio company if engagement is not successful within a specified period*2 A case in which nomination and compensation governance is in place refers to the case where statutory or voluntary nomination and compensation committees have been established, the committee members include two or more
outside directors, and the number of internal directors among the committee members is fewer than the number of outside directors.

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Responsible Investment Report 2023

November 2023 Revisions
The main revisions were: 1 Revision in order to further support the transition to monitoring boards; and 2 Creation of role model standards. Please refer to Page23 for more
information on 1 . Please refer below for more information on 2 . Please refer to Page 83 for information about other revisions.

The Aim of the Role Model Standards
In this revision, we have established new standards (rolemodel standards) under which we expect companies thatcompose the TOPIX 100 (TOPIX 100 companies) to serveas role models. Here, we explain the aim behind this.
Ordinary proxy voting standards mainly establish
conditions for opposing company proposals, and while
they are effective in encouraging companies that are
lagging behind in initiatives such as strengthening
corporate governance (Figure 1 below), in reality
they do not function well as a means of encouraging
companies that are currently implementing initiatives
at an average level to aim for a higher level (Figure
2 below). We believe that even average Japanesecompanies have a large gap between their efforts
and what we view to be desirable management, andthat we need to encourage them to aim to reachhigher levels regarding their initiatives. To this end, we
introduced standards (monitoring board standards)
that make it easier to vote in favor of company
proposals if the company satisfies the monitoring

Companies
lagging in theirinitiatives

board requirements.
Like the monitoring board standards, the role model
standards introduced this time around are intended
to encourage TOPIX 100 companies to strive forhigher levels of initiatives, and they communicate our
expectation that we want them to become role models
in order to achieve desirable management practices(Pages 19-22). Although the target group of companies
for the standards is limited to TOPIX 100 companies,
we hope that it will spur other portfolio companies
to work more ambitiously to achieve desirable
management practices. After November 2024, we may
oppose the reappointment of a chairman, president,
or other director depending on the status of efforts
toward some of the management issues ( 1 to 3
on the right) related to our expectations for desirable
management, but our aim is to encourage companies
to strive for higher levels of efforts, so this will belimited to cases where it is determined that thecompany’s efforts are clearly insufficient.

Companies
with average
initiatives

1Companies
with advanced
initiatives

2
Monitoring board standards

Ordinary proxy voting
standards (Conditions(ease requirements for voting in favor),

for voting in opposition)(conditions for voting in opposition)role model standards

Initiatives of particular focus forrole model standards

1
Information Disclosure
Integrating ESG Issues
Disclose information in accordance with internationallyagreed upon standards through appropriate media,
including integrated reports, and obtain third-party
assurances for numerical data to the extent possible.

2
Climate Change
Establish a medium- to long-term net-zero GHG
emissions target and obtain SBT certification, as well
as clarify risks and business opportunities due toclimate change by disclosing information based on the
TCFD final report.

3
Realizedesirable
management

Outside Directors with
Effective Skills
The skills matrix is disclosed in general shareholder
meeting materials, and indicates that the outside
director possesses abilities and experience, including
related to management/finance/ESG.

82

Changes to Proxy Voting Standards for Japanese Companies
Here, we introduce the changes to our Proxy Voting Standards over the years. For information prior to October 2020, please refer to our Responsible Investment Report 2022 (Page 80).
Referencehttps://global.nomura-am.co.jp/responsibility-investment/pdf/ri_report_2022.pdf

Month/Year of
Revision

Proposal Category

Director election
November
2020

Key Point

Key Change

Particularly important revisions are highlighted.

Monitoring board requirements

NEW (Established eight requirements to be met, including gender diversity, cross-shareholdings, etc.)
for the transition to monitoring boards

Number of outside directors

Raised the minimum for a company with a board of corporate auditors from two (2) to one-third

Requirements for independence ofoutside directors

Added term in office (12 years)

SupportNEW (Relaxed requirements related to business performance, etc., if company has a monitoring board)
Executive compensation

June 2021

November
2021

January 2022

November2022

November
2023

Director election/appropriationof surplus

Director election

Director election

Director election

Director election

Executive compensation/
Executive retirement benefits

83

Responsible Investment Report 2023

Monitoring board requirements

NEW (Vote in favor of making payment of stock compensation satisfying certain requirements to outside directors, etc., if
company has a monitoring board)

COVID-19

Reinstated the application of some standards related to appropriation of surplus

Escalation

NEW Encourage the realization of desirable management (gender diversity, cross-shareholdings, etc., including
initiatives targeting ESG issues)

Business performance standard
based on ROE

Lowered threshold of comparative value to 25th percentile of industry median value
Take management improvement efforts into consideration only when company has a monitoring board

Number of outside directors

There is a controlling shareholder: Raised minimum from one-third

COVID-19

Reinstated application of business performance standard

Business performance standard
based on ROE

Raised the comparison value threshold from 25th percentile to 33rd percentile in industry.

Diversity of the board of directors

NEW (We will vote against a proposal if there are no female directors

Cross-shareholdings

NEW (We will vote against a proposal if there is a particularly large amount of cross-shareholdings)

Number of outside directors(From November 2024) Raised the minimum number from 2 or 1/3 to a majority. However, it is 1/3 for companies without acontrolling shareholder if nomination governance is in place

Director term of office

NEW (For a company with a board of corporate auditors, will oppose if the term of office for directors is 2 years)

Number of directors

NEW (Will oppose if the number of directors is under 5 or more than 20)

Role model standards

NEW (From November 2024, for companies in the TOPIX100, will oppose if initiatives are determined to be clearly
insufficient)Compensation governance

Expanded the scope of proposals we will oppose to all proposals if compensation governance is not in placemajorityAnnual Schedule of a Proxy Voting Representative
June, followed by March and May, are the months in which the largest numbers of Japanese companies hold their general shareholders’ meetings. We exercise our voting rights for about
1,600 portfolio companies in June alone, and more than 1,900 portfolio companies in these three months. Below, we discuss the approximate annual schedule for proxy voting, focusing on
this period with a high concentration of shareholders’ meetings.

Proxy Voting Annual schedule

Jul.

1

6

Aug.
Sep.
Oct.
Nov.

6
5

2

Dec.
Jan.
Feb.
Mar.
Apr.
May.
Jun.

6
3

1

Revisions to Proxy Voting
Guidelines

2

Engagement to inform companies about therevisions to our Proxy Voting Guidelines

July – OctoberNovember – January

As soon as the busy season for shareholders’ meetings ends, we start
reviewing our Proxy Voting Guidelines. Taking into consideration theactual conditions of Japanese companies, which we have learned throughengagement and proxy voting, we make revisions to reflect changes in laws
and regulations, such as revisions to the Corporate Governance Code.

We conduct engagement mainly with the portfolio companies that we
think will be significantly impacted by the revisions to our Proxy Voting
Guidelines. We communicate our views and encourage them to strengthen
their corporate governance. In addition to individual meetings with portfolio
companies, we also explain our views at seminars.

3

Engagement in anticipation of thegeneral shareholders’ meeting.

4

Period when most generalshareholders’ meetings are held

February – May

March – June

As the busy season approaches, we ramp up engagementwith an eye towards shareholders’ meetings. This is the time
when companies are finalizing the proposals they will make atshareholders’ meetings (the proposals have already been finalized
in some cases), so portfolio companies tend to be most interested
in the prospects for individual proposals. However, we try to keepthese discussions focused on strengthening corporate governanceover the medium to long term.

This is a period when we need to accurately judge a large number of
proposals. We exercise voting rights for more than 100 companies per
day during the peak period in June, so it also happens to be the period
when we most want companies to provide information disclosures thatare clear and easy to understand.

4
6

5

Engagement to strengthen
corporate governance

6

Disclosure of proxy voting results

All year, particularly November – MarchJanuary/April/July/October

We explain our proxy voting philosophy and let portfolio companies
explain to us how they are working to strengthen their corporate
governance, and we then talk with them about their efforts.

After the end of each quarter, we disclose the results of our proxy voting,and the reasons behind our voting activities, on our corporate website.

Jul.

84

Disclosure of Proxy Voting Results (Reasons for voting For or Against proposals)
Since the October – December 2019 quarter, we have been disclosing the reasons that we voted for or against all proposals, and we have been providing detailed explanations of
the reasons for those proposals we feel require special explanation. This is an effort to further increase visibility with respect to appropriate proxy voting. Here, we introduce somespecific examples of disclosure with respect to proposals we feel require special explanation.

Proposals we made voting decisions on that differ from our proxy voting
standards
We sometimes make decisions that differ from our proxy voting standards based on
engagement with a company.
GSM Type

Ordinary
GSM

Ordinary
GSM

ProposerCompany

Company

Proposalclassification

Director
election/
dismissal

Director
election/
dismissal

VotingresultReason for proxy voting result

Voted
againstBecause we determined that the directors own the
responsibility for the fact that business results do notmeet our standards. This company’s board of directors
satisfies our standard related to a monitoring board, butthere was an issue with the company’s recognition ofcapital efficiency and there were large concerns related toeffectiveness, so we applied our standards to the company
as if it were not a company with a monitoring board.

Voted for

Although the company does not meet our standards forcross-shareholdings, we voted in favor after taking into
account that the reduction status was confirmed throughengagement.

Proposals we determined to require special accountability
In addition to proposals related to M&A and capital policy, there were proposals asking
companies to increase board diversity.
VotingresultReason for proxy voting result

Ordinary
Appropriation
ShareholderGSMof surplus

Voted forThis was a proposal seeking additional shareholder
returns. After considering the large amount of financial
assets held relative to the scale of the business, theunclear use of financial assets, and the fact that the impact
on financial soundness is minimal, we determined that
it would contribute to the improvement of shareholder
value, and voted for the proposal in accordance with ourstandards.

Organizational
Company restructuringrelated

Voted
againstA proposal related to share exchanges with listed
subsidiaries. Although the dilution ratio of voting rights
was high, considering the fact that the initiatives to protect
minority shareholders were insufficient, we voted against
the proposal in accordance with our standards.

GSM Type

Ordinary
GSM

85

Proposal
Proposerclassification

Responsible Investment Report 2023

Retail sector Company A (Director election/dismissal: Company proposal/shareholder proposal)
BackgroundA certain shareholder (the “proposer”) took issue with the company’s conglomerate discount and proposed a spinoff of its core business, demanding a reexamination of its business portfolio. Company A indicated a strategy to
pursue synergies and rejected the spin-off.
Although it was difficult for us to say that the spin-off proposal was clearly superior, the performance of non-corebusinesses had been sluggish for a long time, and there was an undeniable impression that the management team
had been slow to respond, and there was a need to reexamine the business portfolio. We decided that we could
agree on the need to reexamine the business portfolio.

Proposal outline and voting result
In the company’s proposal there were 15 candidates, while in the shareholder proposal there were 14
candidates, but both parties agreed to 10 of them (4 internal and 6 external candidates, all reappointed), so theselection of the remaining 9 candidates was at issue. Details are shown below.

Reason for proxy voting result
Company proposals Regarding Candidate C, we could not confirm that the candidate has the necessary
skills to re-examine the business portfolio, and that this candidate may not have fulfilled the role expected as
an outside director, so we voted against the proposal. Regarding Candidates D-E, considering the maximum
number of directors as per the articles of incorporation (15 directors) and the history of the current outside
directors implementing a Group strategy re-evaluation, we determined that the board of directors had not
given a proper explanation for the necessity for electing additional new directors, so we voted against the
proposal. In addition, the proposer was also opposed to the election of candidates A-B, but we determinedthat accountability had not been fulfilled regarding the need to replace the management team before a reexamination and consideration by the highly-independent nomination committee, so we voted for the proposalin accordance with our standards.
Shareholders’ proposals Because we can agree with the need for re-examination, and considering the
maximum number of directors as per the articles of incorporation as well as the skill and independence level ofthe candidates, we voted in favor of candidates W-Y, and voted against candidate Z.
Inside directors

Company
proposals

Outside directors (Reappointed)

Shareholders’proposals

Candidate Candidate Candidate Candidate Candidate
Y
A
B
W
X

Voted for

Outside directors (Newly appointed)

Company
proposals

Shareholders’proposals

Candidate Candidate Candidate
C
DE

Voted against

CandidateZIn addition to explaining the reasons for the decisions made on each of the proposals
submitted by shareholders with respect to the issue of climate change, we provided
a comprehensive explanation about the background behind our decisions on climatechange-related proposals as a whole.
Climate change-related proposals submitted by shareholders
 proposal to amend the articles of incorporation was submitted to a number of companies asking them toAaddress the issue of climate change. The issue of climate change is an environmental and social issue that we
believe to be particularly important for the sustainable improvement of corporate value, and we decided todeliberate positively on a proposal demanding enhancement of information disclosure.
 his time around, we carefully deliberated the reasons for the proposals, the companies’ climate changeTinitiatives, the impact on business execution, etc., and approved the proposals that we determined would
contribute to sustainable enhancement of corporate value. On the other hand, we voted against proposals thatwere for the purpose of making social or political assertions, proposals related to individual, specific businessexecution, and proposals that we determined that the opinion of the board of directors should be respected,
taking into consideration the reasons for the proposal and the initiatives of the company in question.
In addition, some of the proposing shareholders indicated that they would like the proposal to be judged on asa recommendation to the company, rather than as a change to the articles of incorporation. Our policy is to fully
consider the impact if the proposal were to be passed, and although we will flexibly judge the appropriateness of
specifying a company’s response to environmental and social issues in the articles of incorporation, we do notbelieve it is appropriate to deliberate on this as a recommendation.

GSM Type Proposer

Ordinary
Shareholder
GSM

Ordinary
Shareholder
GSM

Proposalclassification

Proposal
related to
articles ofincorporation

Proposal
related to
articles ofincorporation

ProposalOrdinary
related toShareholder
GSM
articles ofincorporation

VotingresultReason for proxy voting result

Voted
againstThis was a proposal to change the articles of incorporation
regarding disclosure of public relations activities for climatechange. Although we could agree with some of the points
raised by the proposer, the proposer itself had highly
evaluated the efforts of the company, and the company
has indicated its intention to take further initiatives, so wedetermined that it was more reasonable to respect the boardof directors’ efforts, and we voted against the proposal inaccordance with our standards.

Voted forThis was a proposal to change the articles of incorporation
regarding disclosure of efforts to address the problem ofclimate change. We determined that the impact on businessexecution would be limited, and considering the importanceof the climate change issue on corporate value over the
medium to long term, we determined that it would contributeto sustainable improvement of corporate value, so we voted
for the proposal in accordance with our standards.

Voted
againstThis was a proposal to change the articles of incorporation
regarding disclosure of efforts to address the problem ofclimate change. Although we agree with the importance of theclimate change issue with respect to medium-to long-term
corporate value, we voted against the proposal in accordancewith our standards, determining that the proposal included
content that might add specific restrictions to businessexecution and so it would not be appropriate to add it to thearticles of incorporation.

Proposals involving the possibility of a conflict of interest
We give detailed explanations for proposals of group affiliates, including our parent
company Nomura Holdings as well as for discussions related to matters involving
group affiliates. Here, we discuss proposals in which Nomura Securities, a groupaffiliate, was involved as the provider of global stock ownership plans, or acquisitions ororganizational restructurings as a financial advisor or and third-party assessor.

GSM Type Proposer

Ordinary
GSM

Special
GSM

Special
GSM

Company

Proposalclassification

Executivecompensation

Organizational
Company restructuringrelated

Company

Proposal
related toother capital
policyVotingresultReason for proxy voting result

Voted
againstThis was a proposal seeking approval for a global stock
ownership plan in the US. Although we recognize thesignificance of advancing employee stock acquisition, we
judged that the number of shares to be issued, etc. was
not disclosed and accountability was not being fulfilled,
so we voted against the proposal in accordance with ourstandards. Nomura Securities, a Nomura Group company,
is involved in this matter as the provider of the global stock
ownership plan.

Voted
againstThis was a proposal regarding a share exchange. The
effort to protect the interests of minority shareholders wasinsufficient, and we determined that the board of directors
had not fulfilled its accountability with respect to theeconomic terms being unfavorable, so we voted against
the proposal in accordance with our standards. Nomura
Securities, a Nomura Group company, was involved in thisdeal as a financial advisor and third-party assessor.

Voted forThis was a proposal to squeeze out shareholders who
did not tender their shares in a tender offer conducted
for a management buyout (MBO). Although there werestrong concerns about a conflict of interest with minority
shareholders, we confirmed that sufficient efforts had been
made to protect the interests of minority shareholders, andconsidering that the economic terms were reasonable, we
voted for the proposal in accordance with our standards.
Nomura Securities, a Nomura Group company, wasinvolved in this deal as a financial advisor and third-party
assessor.

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Proxy Voting FAQ
Que
stio
n

Q

Ans
wer

A

We carry out engagement and proxy voting so that portfolio companies implement desirable management(P.19-P.22), and to encourage them to improve corporate value and realize sustainable growth. We reflect
the information about portfolio companies obtained through engagement in: 1 Revisions of our proxyvoting standards; 2 Escalation; and 3 Proxy voting decisions on individual proposals.

Relationship between engagement and proxy voting

Do you have standards in orderto realize effective initiatives forenvironmental and social issues?

A

Ans
wer

Que
stio
n

Q

Can engagement have an impact on proxy voting?

We have established the following fourstandards related to environmental andsocial initiatives. 2 is proxy voting which
is an extension of engagement. However, withrespect to 1 , 3 and 4 , we carry out engagement
as necessary which leads to effective proxy voting
and we also urge companies to implement effective
measures.

Engagement11

Formulation of proxyvoting standards
Information and opinions obtained
through engagement are valuable
for formulating proxy voting
standards.

Example: We introduced a standard
whereby we will vote against thereappointment of the chairman,
president, etc., and outside directors if,
based on the details of engagement, we
determine that there are major concerns
about the management of conflict ofinterest with respect to parent-subsidiarystock listings, and if a listed subsidiarythat meets certain conditions provides
loans, etc. to the parent company.

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Responsible Investment Report 2023

2

Escalation
We may vote against director
election proposals if efforts torealize desirable management(including initiatives targeting ESG
issues)* are inadequate.

*R efer to Page 19-22 for information
about desirable management

3

Judgment of
individual proposals
Our decisions may differ fromthe proxy voting standards if we
can identify actions targeting
improvement, or in cases ofcircumstances we did not
anticipate at the time the proxyvoting standards were formulated.
Example: Although the company’s
ROE was struggling and did notmeet our standards, we voted fora proposal after considering thatthe company had suppressed thedeterioration of the company’s
financial indicators such as ROE,
better than industry peers, both
domestically and overseas.

2

If we find a problematic action from the perspective ofaddressing ESG issues, and we determine that the action
would significantly damage shareholder value, we will voteagainst a proposal to elect the person responsible for theaction as a director.
We have established “appropriate efforts to addressenvironmental and social issues” as part of the desirable
management practices of portfolio companies, and we carryout engagement aimed at having these efforts put into practice.
If, based on the situation, we determine it to be necessary to
escalate to proxy voting, we will vote against the reappointmentof the company’s chairman, president, or other directors.

3

We expect the companies that compose the TOPIX100 to serveas role models for Japanese companies. From November 2024
onwards, if we determine a company in the TOPIX100 to beclearly insufficient in their disclosure of ESG-related informationor their climate change-related efforts, we will vote against thereappointment of the chairman, president, or other directors.

4

With respect to shareholder proposals demanding changes to thearticles of incorporation regarding basic policies about ESG anddisclosure in accordance with the final report of the Task Forceon Climate-related Financial Disclosures (TCFD), we will vote forsuch proposals, on the condition that they do not include content
related to individual, specific business execution, etc.

A

Ans
wer

Proposals concerning the election of directors
are the most common type of proposal, andtherefore have a large impact on our opposition
ratio. Taking into consideration the continuity of the board of
directors*1, we limit director election proposals we oppose
to candidates holding the responsibility for individual
matters. This is the reason why our opposition ratio looks
relatively low (see chart below). In fact, for general meetingsof shareholders held between April and June 2023, ouropposition ratio for proposals to elect directors was 9.3%,
but the percentage of companies for which we opposed
one or more candidates within a proposal was 47.3%, which
is not a particularly low level. On the other hand, since thenumber of proposals is low, the overall impact is small,but our opposition ratio appears to be relatively high withrespect to proposals related to executive compensation orcapital policy. The effectiveness of corporate governancecomes into question particularly for proposals related to
M&A and financing, so we carefully discuss these issues,
including the impact that a rejection of the proposal would
have, and we vote against the proposal if we decide that it
will not contribute to the interests of minority shareholders.
Furthermore, we aim to achieve desirable corporate
governance and improve corporate value by working on
portfolio companies through a combination of proxy voting
and engagement. We position proxy voting as one of themeans to do this, and we do not believe that our opposition
rate is indicative of our stance.

Que
stio
n

Q
A

We have established the following threeproxy voting standards. For 2 , we exercise
voting rights as a part of engagement,
while for 1 and 3 , we also implement engagement
as necessary, and along with connecting these toeffective proxy voting we urge companies to carryout effective initiatives.

1

All candidates

If proposal
we opposed is rejected
Board of Directors meetings cannot
be held due to absence of directors

2

Opposition ratio will rise
Undermines the ability of the Board of
Directors to continue functioning

Applicable toreason*2 for
opposition
Judgments on
individual proposals

Board of Directors meetings canbe held with other directors
Opposition ratio will decline
Ensures the ability of the Board of
Directors to continue functioning

We chosethis

We will oppose the reappointment of an outside director
if it becomes clear that he or she has not adequately
performed the roles expected of them. Past cases in which
this standard has been applied include the following: listed subsidiary with a large amount of net financial
A
assets lent funds to the parent company.
A tender offer was made for treasury stock at a price
above the most recent share price, with the aim ofacquiring shares held by a specific shareholder.
D espite the finding of inappropriate related-party
transactions by management, there was insufficientpursuit of responsibility.

Guideline for Director Election Proposals
Persons subject toopposition

Do you have standards toreflect the effectiveness ofoutside directors?

Ans
wer

Que
stio
n

Q

It seems like you vote against company proposals only a small percentage ofthe time. Can you comment on that?

3

We have defined “sufficient exercise of corporate
governance functions” as the desirable form ofmanagement for portfolio companies, and engage withthem to achieve this. If we determine that escalation toproxy voting is necessary based on the situation, we
will oppose the reappointment of directors such as thechairman and president.

We expect TOPIX 100 companies to serve as role models
for Japanese companies. From November 2024 onwards,
if we determine that the skills of the outside directors areclearly insufficient, we will oppose the reappointment of thedirectors such as the chairman and president.

*1 Under the Companies Act, a minimum of three directors is necessary in order to hold a Board of Directors meeting.
*2 Shortage of outside directors, low ROE, etc.

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