Enhancing the Effectiveness of Corporate Governance

The Evolution of Chori’s Corporate Governance

Evaluation of the Effectiveness of the Board of Directors

Chori conducts an evaluation of the effectiveness of the Board of Directors each year in order to realize a more effective Board of Directors. The evaluation process involves conducting a questionnaire with all directors on the composition, operation, discussions, and support system of the Board of Directors and then compiling the views of each director. Based on the results of the questionnaire, the Governance Committee and the Board of Directors evaluate and analyze the effectiveness of the Board of Directors as a whole. Through this process, it was determined that the Board of Directors is composed of suitably qualified members that include outside directors, and the Board of Directors’ meetings are held in a free and open environment that facilitates constructive discussions and the exchange of opinions. Accordingly, it has been deemed that the Board of Directors is operating appropriately on the whole and that its effectiveness is ensured.

Respondents: All eight directors (including those who are Audit & Supervisory Committee members) in FY03/2024 (anonymous questionnaire)

Method of Evaluation and Analysis: Evaluation and analysis conducted by the Governance Committee and the Board of Directors upon aggregation of results by a third-party institution and ensuring confidentiality

Questionnaire Content

Questions are based on the following nine major themes

Composition of the Board of Directors
Operation of the Board of Directors
Discussions of the Board of Directors
Monitoring function of the Board of Directors
Support system for directors (including those who are Audit & Supervisory Committee members)
Training
Dialogue with shareholders (investors)
Governance Committee operations
Individual initiatives
Comprehensive evaluation

Overview of Evaluation Results: We have confirmed that feedback on the status of dialogue with shareholders and investors, which was identified as an issue in the previous fiscal year, has shown improvement. As an ongoing issue, we recognize the need for further discussion and expansion of deliberations based on follow-up on the progress of the medium-term management plan beyond quantitative targets. In addition, we have shared the opinion that sufficient discussion should be held with an awareness of profitability, capital efficiency, and other factors in determining management strategies and plans. Furthermore, we have shared the opinion that in determining succession plans and director compensation, the way in which discussions and reports are to be conducted by the Board of Directors should be considered based on deliberations by the Governance Committee. Hereafter, we will continue to discuss management and business issues we have identified and continuously work to improve the effectiveness of the Board.