Corporate GovernanceCorporate Governance:
Emphasizing Corporate ValueMARUI GROUP’s corporate philosophy calls for us to“continue evolving to better aid our customers” and“equate the development of our people with the devel­
opment of our company.” Accordingly, we support thepassion of all employees to aid our customers to createa virtuous cycle in which the growth of our people furthers the development of the Company, which in turnfacilitates the further growth of our people. This cycle ispart of our pursuit of improvements to corporate value.
Given this approach, reinforcing corporate governance isa top priority, and we endeavor to practice sound management that is highly transparent and efficient toheighten earnings capacity.
In addition to its Board of Directors and Audit &Supervisory Board, MARUI GROUP has established theDirectors

Audit & Supervisory
Board Members

External(Independent)

External(Independent)

62

42Management Committee, which functions as the highest
decision-making body and is composed of 16 executive
officers. In the fiscal year ended March 31, 2016, theCompany redefined the roles of the Board of Directorsand the Management Committee, choosing to reduce
the number of directors, and instituted other measures
for reinforcing corporate governance. In addition, we
formulated the MARUI GROUP Corporate Governance
Guidelines to codify our stance toward corporate
governance and our initiative policies.
MARUI GROUP Corporate Governance Guidelines
www.0101maruigroup.co.jp/pdf/cgg_en.pdf
Corporate Governance Reportwww.0101maruigroup.co.jp/pdf/cgr_en.pdf

Executive Officers

16Female3Nominating and Compensation
Committee Members

3

External(Independent)

2

101Corporate GovernanceCorporate GovernanceInitiatives for Reinforcing Corporate Governance2007

Oct. Adopted a holding company system

2008

Jun. Appointed first external director

2016 Mar.– Conducted evaluation of the Board of Directors’ effectiveness
May All directors and Audit & Supervisory Board members completed a self-evaluation survey of the effectiveness of theBoard of Directors. Based on these surveys, it was decided that the Board of Directors was functioning sufficiently.
Areas applauded and issues identified included the following.
Areas Applauded· Active discussion centered on external directors appointed by reducing the total number of directors· Respect for opinions of external directors· Incorporation of perspectives of shareholders, investors, and other stakeholders
Issues Identified· Lack of successor development programs· Failure to link director compensation to medium-to-long-term performance

Mr. Koichiro Horiuchi has accumulated a wealth of management experience and insight from hislong career at FUJI KYUKO CO., LTD., and actively offers opinions and advice from an independentand objective standpoint.

Shortened the term of all directors to one year to clarify management responsibilities
2014

Jun. Appointed second external director
Ms. Etsuko Okajima has accumulated a wealth of management experience and insight atProNova Inc. as well as a deep understanding of diversity issues and actively offers opinions andadvice from an independent and objective standpoint.

2015

May

Mar. Redefined roles of the Board of Directors and the Management Committee to separate management
decision making and oversight from operational execution
The Board of Directors was defined as a forum for discussing important issues, and steps were taken to stimulate
discussion centered on outside directors in order to enhance the Board’s functionality as a venue for creatingGroupwide strategies for improving corporate value. The Management Committee was delegated a wider range ofdecision-making authority from the Board of Directors in order to expedite management decisions.

Apr. Established Criteria for Independence of External Directors and Audit & Supervisory Board Members
Criteria for Independence of External Directors and Audit & Supervisory Board Members

www.0101maruigroup.co.jp/pdf/cgg_en.pdf

Jun. Reduced the number of directors from 10 to 6
We reduced the number of directors by four to reinforce the supervisory functions of the Board of Directors by making
it easier for the opinions of the external directors to be incorporated into management practices.

❶ Established Nominating and Compensation Committee with external directors as its primary members
Based on a resolution by the Board of Directors, the Nominating and Compensation Committee must consist of at least
three members, two of whom must be outside directors. At a meeting of the Board of Directors held on May 12, 2016,
three members were appointed: external directors Koichiro Horiuchi and Etsuko Okajima, and President Hiroshi Aoi.
We believe that discussing matters related to the nomination and compensation of directors at a committee with­external directors as its primary members will help ensure objectivity and transparency and thereby contribute to
the enhancement of our corporate governance system.

Jun.

❷ Introduced performance-linked, stock-based compensation to serve as a medium-to-long-term
incentive for directors and executives of the Company and directors of subsidiaries
Through the performance-linked, stock-based compensation system, applicable officers receive allocations of Company
stock every three years that are adjusted via a coefficient within the range of 0% to 100% based on the KPI defined forthat period (ROE, EPS, and ROIC for the first three-year period). The Company has adopted the Board Incentive Plan
Trust scheme for this system. Accordingly, director compensation now consists of fixed basic compensation, performance-linked bonuses, and performance-linked, stock-based compensation. In addition, an incentive plan based on theEmployee Stock Ownership Plan Trust scheme has been instituted for managers of Group companies to increase theirmotivation to contribute to medium-to-long-term improvements in performance and corporate value for the Company.

Aug. Published Japanese-language version of first integrated report, Co-Creation Management Report 2015;
English-language version published in October 2015
Oct. Established dedicated investor relations department
MARUI GROUP strives to co-create corporate value together with shareholders and other investors. To this end,
we conduct twice-yearly financial results briefings and also hold meetings with individual domestic and overseas
shareholders and investors individually or in small groups.
  

P141 M
 ARUI GROUP Ranked High in the 2016 All-Japan Executive Team Rankings Released by U.S. Financial Industry Magazine Institutional Investor

Nov. Formulated MARUI GROUP Corporate Governance Guidelines
The MARUI GROUP Corporate Governance Guidelines codify our stance toward corporate governance and our initiative
policies, including those for improving corporate value. For example, it is stated that one-third of directors should beexternal directors (independent directors), that the Company is to conduct appropriate capital measures based on its
business structure, and that the Company will not engage in cross-shareholdings except when necessary.
MARUI GROUP Corporate Governance Guidelines

www.0101maruigroup.co.jp/pdf/cgg_en.pdf

Published Japanese-language Co-Creation CSR Report 2015, focusing on our connections with localcommunities and the greater society; English-language digest published in February 2016
Dec. Held explanatory forum on Co-Creation Management Report 2015MARUI GROUP held its first integrated report explanatory forum onCo-Creation Management Report 2015 for institutional investors,analysts, and members of the press to faciliate understanding of thereport’s contents. In this forum, President Aoi and representatives
from each business explained co-creation management policies andexamples of specific initiatives.

102Co-Creation of Corporate Value with Shareholders and Other Investors
In October 2015, we established the IR Department, a dedicated organization consisting ofseven members, who primarily engage in communication with institutional investors. In one
year, we met with between 200 and 300 institutional investors, including those overseas.
Through our discussions with these investors, we gain valuable insight into matters such as
how to view corporate value and balance sheet policies. I feel that this input was effectively
utilized in shaping MARUI GROUP’s new medium-term management plan, which covers theperiod leading up to the fiscal year ending March 31, 2021. Corporate value certainly
cannot be summed up in a single statement. Nevertheless, it is important for the Company
to actively explain its view on corporate value and its efforts for improving this value. This is
one of the main reasons we publish co-creation management reports. We also held explanatory forums on the 2015 report to delve into topics that were not completely covered in thereport for that year. A number of junior employees from the frontlines of business took thestage at these events, providing energized perspectives of how co-creation efforts arecontributing to corporate value or where they find motivation in their own work. Investors inattendance stated that these presentations greatly enhanced their understanding. Our
initiatives over the past year bore results as the Securities Analysts Association of Japan
identified MARUI GROUP as a company demonstrating a massive improvement in disclosure
during the fiscal year ended March 31, 2016, and the Company ranked high in the 2016
All-Japan Executive Team Rankings released by U.S. financial industry magazine Institutional
Investor. Going forward, we will continue to provide inclusive explanations of our activities
to deepen stakeholder understanding.

Hirotsugu Kato
Director and Senior Executive Officer
General Manager,
Corporate Planning Division and IR Department103