News

Summary of the Results of Analysis and Evaluation of the Effectiveness of the Board of Directors

Aug 29, 2024

The TechnoPro Holdings, Inc. Board of Directors conducted an analysis and evaluation of its effectiveness for the fiscal year ended June 2024 based on the Corporate Governance Code of the Tokyo Stock Exchange and the Corporate Governance Guidelines of the Company. The goal of this initiative, the results of which are provided below, is to improve the function of the Board of Directors.

1. Methodology and Process of the Analysis and Evaluation

The Board has analyzed and evaluated its effectiveness once a year starting in the fiscal year ended June 2016, and has provided a summary of these results for the ninth consecutive year.

Analysis and evaluation methods are as follows.

Evaluation method	Self-evaluation questionnaire (registered form)
Evaluators	All Directors (including Audit & Supervisory Committee members)
Questionnaire Items Evaluated (Major topics)	I. About status of improvements, etc. on prior fiscal year’s extracted issues II. About this fiscal year’s status (1) Roles and functions of the Board of Directors (2) Composition of the Board of Directors (3) Roles and functions of individual Directors (4) Relationship with shareholders, investors, and other stakeholders (5) Operation of the Board of Directors meeting (6) Cooperation with meetings, etc. besides the Board of Directors
Collection of opinions and proposals	The questionnaire included standard evaluation topics, as well as comments, candid opinions and suggestions from the Directors.
Analysis method	Hold a discussion in the Board of Directors meeting based on the result from the self-evaluation questionnaire to check the effectiveness of the Board of Directors and extract issues.

Prior to the analysis and evaluation of the effectiveness for the fiscal year ended June 2024, the TechnoPro Holdings, Inc. Board of Directors discussed once again the need for revising the self-evaluation questionnaires during the regular meeting of the board held in March 2024. As a result, the structure and format of the questionnaires were significantly revised to evaluate and confirm the degree of achievement of improvements in the issues extracted in the previous fiscal year, as well as the issues that require improvements considering the situation of the fiscal year under review, and the degree of necessity and urgency of those improvements. Subsequently, after the Directors including the Audit & Supervisory Committee members answered the questionnaires, the analysis of evaluation results, and identified issues were reported at the July 2024 regular meeting of the Board of Directors. At the same time, an active and frank discussion was held regarding initiatives to improve the effectiveness of the Board of Directors in the future.

2. Analysis and Evaluation Results

As a result of the evaluation and analysis in 1., above, the TechnoPro Holdings Board of Directors has concluded that the board performs its roles and responsibilities appropriately and effectively overall. The following points were identified in particular as highly regarded initiatives for the fiscal year ended June 2024, as well as strengths that should be maintained by the Company’s Board of Directors. (Furthermore, for reference the table at the end of the document shows the items that have advanced and improved up until that point)

Highly Evaluated Initiatives for the Period, Particular Strengths to be Maintained, etc.

(1)Where the fiscal year ended June 2024 was the third year of the current medium-term management plan (“Plan”), progress reports on the Plan in general, as well as other business reports on the overall results of the first two years of the Plan and the strategies and key initiatives for the third year from major group operating companies, and important individual themes related to the Plan, such as Solution Business, Engineer Education Business, DX Promotion Business, Overseas Business, confirmation of the progress and future strategies of IT medium-term plan including the development of core internal systems, were conducted appropriately at the Board of Directors meetings, and necessary verifications and discussions were also conducted. Further, the Board of Directors performed its supervisory and monitoring function over operation divisions, through initiatives such as receiving reports concerning the details of the discussion, mainly made by the executive directors, at the Plan review meeting, and deliberating on them with the outside directors.
(2)Taking advantage of the transition to a company with an Audit & Supervisory Committee, the functions and roles of the Board of Directors were discussed once again. As a result, the criteria for submission of proposals to the Board of Directors was revised in order to delegate authority for decisions on important business execution to the Executive Officers, making progress in establishing a system to expedite management decision-making and execution.
(3)The Board of Directors has evolved the reporting on PMI of acquired and invested entities into a strategic review. In this review, the Board began to deliberate the optimal business portfolio based on the alignment with the Group’s overall strategy and the evaluation of investment performance. The Board determined to continue conducting these reviews regularly.
(4)The newly established Management Development Committee began discussions regarding the formulation of a succession plan for key positions and its implementation into a program, as well as deliberations on organizational restructuring and associated HR-related matters linked with the Plan review meetings.
(5)The appointment of the chief Independent Outside Director as the chairperson of the Board of Directors has further advanced the establishment of an environment aiming at enhancing the effectiveness of the Board of Directors in supervising the Company's management.

The Board has acknowledged the necessity of following initiatives and considerations, as areas in which the Board recognizes room for improvement of board of director effectiveness, or issues to be addressed.

Issues to Address, etc.

(1)Implement further improvement to ensure the efficient operation of the Board of Directors to allocate more time for discussions on essential issues through identifying items that require focused monitoring by the Board of Directors and explaining the agenda in advance.
(2)Consider the composition, style, and appropriate volume of materials at the Board of Directors meetings to provide sufficient information which is necessary for the Board of Directors to supervise management and deliberate on matters and accelerate the timing of providing these materials.
(3)Establish a structure in which the issues with major risks will be shared with the Board of Directors in a timely manner and discussed immediately.
(4)From the viewpoint of the Board of Directors of a leading company group in the engineering professional services industry, conduct deliberations on the growth opportunities and challenges of the entire industry.
(5)Carry out in-depth discussions and verify the effectiveness of initiatives, at the Board of Directors meeting, regarding the important themes in HR area that are directly related to sustainable growth of the Group. In addition, ensure effective operations by re-examining the functions and roles of the Board of Directors, the Nomination and Compensation Committee, and the Management Development Committee, as well as the cooperation among these committees.

3. Future Initiatives

In the context of this Analysis and Evaluation of the Effectiveness of the Board of Directors, the TechnoPro Holdings Board of Directors will strive for greater board effectiveness, aiming for best practices in corporate governance and further increase in corporate value by tackling, in a focused way, Section 2., Issues to Address, etc. above.

At the 19th Annual General Meeting of Shareholders scheduled for September 27, 2024, we request approval for the appointment of a new outside director who is not a member of the Audit & Supervisory Committee under the resolution of the Board of Directors based on the deliberations of the Nomination and Compensation Committee regarding the succession of the Outside Directors.

(Reference: Main progress and improvement items in view of the analysis and evaluation in the previous period)

FY ended June 2024	Appointed the chief Independent Outside Director as the chairperson of the Board of Directors Expanded the scope of authority delegated to Executive Officers, along with the transition to a company with an Audit & Supervisory Committee Started regular strategic reviews Conducted discussions in the Nomination and Compensation Committee regarding the specific succession plan for Outside Directors Started discussions in the Management Development Committee concerning succession plans for key positions Renewed the self-evaluation questionnaire related to the results of analysis and evaluation of the effectiveness of the Board of Directors
FY ended June 2023	Made a transition to a company with an Audit & Supervisory Committee Comprehensively revised the Corporate Governance Guidelines Revised the skills matrix for the Board of Directors Carried out business reports from major group operating companies and progress reports on important individual themes related to the medium-term management plan Deliberated on the issues and future initiatives based on the details of the discussion at the Plan review meeting
FY ended June 2022	Conducted monitoring of the progress of the new medium-term management plan Implemented the revision of criteria for the agenda of the Board of Directors meetings Considered measures to enhance the Board of Director functions and determined a policy for reviewing the institutional design of the Board of Directors Shared matters deliberated by the Nomination and Compensation Committee and provided appropriate supervision over the committee by the Board of Directors Appointed one female outside director with extensive knowledge in the IT field, further promoted the diversity in the Board of Directors
FY ended June 2021	Deepened strategic discussions through deliberating on formulation of the medium-term management plan Executed CEO succession through the objective process Discussed the executive compensation system that has higher linkage to the performance and promotes value sharing with shareholders Appointed one female outside Audit & Supervisory Board member, further promoted diversity in the Board of Directors and Audit & Supervisory Board Implemented electronic signature on board meetings minutes
FY ended June 2020	Established cost of capital as a reference in business management, strategy reviews, investment decisions, etc. Updated cash flow simulations assuming worsening business conditions Created a skills matrix for the board of directors and the Audit & Supervisory Board Began discussions to revise director compensation plans Endeavored in prior expansions of agenda items, improved board meeting minutes reflecting details of deliberations
FY ended June 2019	Decided upon “Standards and Procedures for Appointment and Dismissal of CEO” Carried out more in-depth discussions and sharing of important company issues and strategies, etc. (work style reform in Japan and improvements to employee satisfaction, global strategies, business process innovation, etc.) Reports on performance of acquired subsidiaries and investees, and discussions on usage of cost of capital as KPI
FY ended June 2018	Limited attendees in principle to directors and Audit & Supervisory Board members in order to conduct more in-depth discussions on management issues and strategies, etc. Shared and explained agenda items before meetings with not only outside directors, but also executive directors, and Audit & Supervisory Board members Annual agenda of business reports and discussion topics set in advance Introduced an online systems allowing outside directors and outside Audit & Supervisory Board members to view materials and minutes, etc. Ensured cooperation with not only the Audit & Supervisory Board, but also the board of directors and accounting auditor (Implemented reporting by outside accounting auditor)
FY ended June 2017	Number of female outside directors increased by one, ensuring diversity in the composition of the board of directors Multiple discussions by the board of directors into the process of formulating a new medium-term management plan Regular prior explanations of board of director agenda items to outside directors Start of discussions in the Nomination and Compensation Committee addressing the process for nominating a successor to the chief executive officer

See the TechnoPro Holdings website for more about the TechnoPro Group Corporate Governance Guidelines:
https://www.technoproholdings.com/en/

(Note on translation)
This document is provided for informational purpose only. If there are any discrepancies between this and the original, the original Japanese document prevails.