りそなＨＤ（8308） – [Delayed] Corporate Governance Report

CORPORATE GOVERNANCE Last updated: December 6, 2021 Resona Holdings, Inc. Masahiro Minami President and Representative Executive Officer Inquiries: Corporate Governance Office TEL.: +81-3-6704-3111 Securities Code No.: 8308 https://www.resona-gr.co.jp/ Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Fundamentals The corporate governance policies, structure, systems and initiatives of Resona Holdings, Inc. (“Resona Holdings” or “the Company”) are presented as follows. I. 1. Basic Views Resona Holdings, Inc. (hereinafter the “Company”) has established the Basic Corporate Governance Policy to clarify its basic approach to and framework and operation policy for corporate governance, with the aim of facilitating the sustained growth and improvement of the corporate value of the Resona Group (hereinafter the “Group”) over the medium and long terms. (Basic Approach to Corporate Governance) The Company, as the holding company of the financial services group, including Resona Bank, Limited, Saitama Resona Bank, Limited and Kansai Mirai Financial Group, Inc. (hereinafter the “Group Banks”), shall maximize the corporate value of the Group. The Company shall respect all stakeholders, including shareholders, and aim at achieving excellent corporate governance so that the Company can make decisions rapidly and decisively in response to environmental changes, including economic and social changes. The Company shall establish the Corporate Mission (Resona Group Management Philosophy),” a general philosophy of management of the Group, and the “Resona Way (Resona Group Corporate Promises),” a specific form of the philosophy, under which the Group shall implement business operations in a concerted manner. (The Company’s Corporate Governance System) Based on the above-mentioned basic approach to corporate governance, the Company shall clearly separate the management supervision function from the business execution function, and adopt the form of “company with a nominating committee, etc.,” as a corporate governance system because the Company determines that this system can enhance the supervision and decision-making functions of the Board of Directors. The Company shall fully utilize external views in its business management and secure transparency and fairness in management by ensuring the Board of Directors, on which highly independent outside directors constitute a majority, and the three committees (the Nominating Committee, the Compensation Committee and the Audit Committee) fulfill their functions. The Company shall ensure the autonomy of its Group companies and instruct the Group companies to manage their business activities based on the above-mentioned basic approach to corporate governance so that the Group will grow together with local communities. (The Resona Group Corporate Mission, the Resona Way (Resona Group Corporate Promises)) (1) The Resona Group Corporate Mission The Resona Group aims at becoming a true “financial services group full of creativity.” Toward this goal, the Resona Group will: – – live up to customers’ expectations renovate its organization 1 implement transparent management, and – – develop further with regional societies (2) The Resona Way (Resona Group Corporate Promises) a. Customers and “Resona” Resona cherishes relationships with customers. The Resona Group offers its customers services with integrity for their joy and happiness, placing the highest priority on winning their confidence in Resona. The Resona Group makes every effort to respond fully to the needs of customers by offering high-quality services. The Resona Group always welcomes customers with gratitude. b. Shareholders and “Resona” Resona cherishes relationships with shareholders. The Resona Group aims at maximizing its corporate value by implementing sound management based on a long-term perspective. The Resona Group returns an appropriate amount of sound profits to its shareholders. The Resona Group leaves nothing unresolved in all situations, endeavors to create transparent management and actively upgrades its disclosure. c. Society and “Resona” Resona places importance on its ties with society. The Resona Group makes every effort for an extensive number of citizens to acknowledge the significance of Resona’s existence. The Resona Group observes every rule of society. The Resona Group contributes to regional societies as a good corporate citizen. d. Employees and “Resona” Resona highly regards each employee’s dignity and personality. The Resona Group creates a workplace where employees can take pride in being a member of Resona. The Resona Group thinks highly of its employees’ mind-set and endeavors to make the Group’s business atmosphere challenging and creative. The Resona Group cherishes each employee’s dignity and personality and evaluates ability and achievement in a fair manner. Please also visit the Company’s website featuring its Basic Corporate Governance Policy. https://www.resona-gr.co.jp/holdings/english/about/governance/pdf/bcg_policy.pdf 2 The Company adopts all principles set forth by the Corporate Governance Code except for those listed For other details regarding the Group’s status vis-à-vis this principle, please also refer to the corresponding Reasons for Non-Compliance with the Principles of the Corporate Governance Code Update This report is prepared in conformity with the revised Corporate Governance Code that came into effect in June 2021 while, in anticipation of Resona Holdings being listed in the Prime Market category with the introduction of new listing categories at the Tokyo Stock Exchange on April 4, 2022, voluntarily featuring statements applicable only to companies so listed. below. Supplementary Principle 2.4.1: Ensuring Diversity in the Promotion of Core Human Resources Having positioned diversity management as a cornerstone of its human resource management, the Resona Group is striving to empower all employees, regardless of gender, age or nationality, to realize their full potential and achieve career success in line with its policy of promoting diversity & inclusion. The Group also considers it essential to incorporate global perspectives and appreciate diverse value systems in the course of these endeavors in order to address a variety of issues customers are now confronting. In sum, the Group believes that diversity is key to advancing its efforts to become the “Retail No. 1” financial service group and accomplish a sustainable improvement in corporate value. At present, the Resona Group has not formulated a separate policy regarding the promotion of foreign nationals to managerial positions to support the abovementioned goals. However, the Group intends to push ahead with in-depth discussions to determine how to promote human resources equipped with global perspectives, including foreign nationals, in order to execute its future growth strategies. In addition, a number of locally hired employees are playing key roles at the Group’s overseas locations. For example, the number of foreign national (non-Japanese) managers at Bank Resona Perdania in Indonesia totals 56, representing approximately 94% of the overall number of said bank’s managerial positions. Meanwhile, eight (80%) of the managers at Resona Merchant Bank Asia in Malaysia are foreign nationals. article presented below as part of “Disclosure Based on the Principles of Corporate Governance Code.” Supplementary Principle 3.1.3: Initiatives on Sustainability and Investments in Human Capital and Intellectual Properties The Resona Group is pursuing digital transformation (DX) on an ongoing basis to establish an unprecedented business model. To this end, the Group intends to promote the further development of businesses via ongoing investment in and the utilization of intellectual capital while maintaining in-depth discussions regarding how to establish a business model capable of serving as a new source of income. Moreover, the Group will build a robust structure for formulating and verifying strategies based on conclusions reached through these discussions. article presented below as part of “Disclosure Based on the Principles of Corporate Governance Code.” Disclosure Based on the Principles of Corporate Governance Code Update The status of the implementation of the Company’s measures based on the principles set forth in the Corporate Governance Code is presented in the “Basic Corporate Governance Policy” and this report. Principle 1.3: Basic Strategy for Capital Policy With regard to capital policy, the Company is striving to strike an optimal balance between financial soundness, profitability and shareholder returns in a way that improves corporate value. 1. Financial soundness The Company aims to raise its equity ratio and, to this end, is working to secure a sufficient level of capital vis-à-vis currently applicable domestic standards in a way that meets the below listed three objectives. Further, in light of internationally unified standards, the Company will also strive to achieve a Common Equity Tier 1 capital ratio (excluding unrealized gain on available-for-sale securities; based on regulations to be effective upon the enforcement of the finalized Basel 3) of 10% by the end of the final year of the medium-term management plan. (1) Contributing even more to regional societies and to sound economic development via such means as the provision of stable funding and other services (2) Securing sufficient capital to ensure our continued existence as a trustworthy financial institution operating in the global financial industry and realizing sustainable growth For other details regarding the Group’s status vis-à-vis this principle, please also refer to the corresponding 3 Specifically, the Company will aim to achieve a total shareholder return ratio in the mid-40% range over (3) Maintaining strategic flexibility and thus safeguarding our ability to seize investment opportunities and take steps in response to changes in financial regulations 2. Profitability The Company will aim for an ROE surpassing 8% by maintaining financial management conscious of capital efficiency, risk, cost and returns. 3. Shareholder returns While maintaining a stable stream of dividends, the Company will strive to enhance shareholder returns in a way that gives due consideration to a balance between financial soundness and profitability as well as opportunities for growth investment. the medium term. Principle 1.4: Cross-Shareholdings The Company has established the Policy for Holding Policy-Oriented Stocks and the Policy for the Voting Right Exercise Standards of Holding Policy-Oriented Stocks in relation to such stocks. These policies and standards are disclosed through the following media. Outline of Policy for Holding Policy-Oriented Stocks Outline of Policy for the Voting Right Exercise Standards of Holding Policy-Oriented Stocks Outline of Process for verifying the appropriateness of the holdings of policy-oriented stocks https://www.resona-gr.co.jp/holdings/english/about/governance/pdf/related_policies2.pdf Status of Initiatives Since the massive infusion of public funds aimed at reinforcing the Company’s capital, Resona Holdings has engaged in ongoing negotiations with its corporate clients to steadily reduce the volume of policy-oriented stocks held by Group entities, thereby mitigating its exposure to price fluctuation risks. Going forward, the Company will maintain a basic policy of reducing the balance of such stocks in light of environmental changes, such as changes to the Corporate Governance Code. In addition, as of March 31, 2020, the Company verified the appropriateness of the holdings of policy-oriented stocks and concluded that the purpose of all the policy-oriented stock holding is in compliance with the Policy for Holding Policy-Oriented Stocks. The stockholding verification process involved assessments of each investee’s stock performance that examined profitability versus capital costs alongside medium- to long-term credit risk. In these assessments, the investee must satisfy certain profitability criteria and secure profitability in excess of capital costs even after the deduction of credit costs from profit. Profitability: Profitability is calculated as profit less credit costs minus capital costs ((the sum of loans and stock-related risk weighted assets × targeted capital adequacy ratio + impairment VaR) × capital cost ratio) These assessments revealed that the overall profitability of the Company’s transactions with listed investees was in excess of capital costs and that the same applies to unlisted investees. Taking a look at each investee, the Company confirmed that investees whose profitability surpasses capital costs account for approximately 70% of total investees. Currently, the Company is engaged in negotiations with investees failing to meet this profitability standard and other investees deemed to be in need of measures to improve profitability. Hereafter, the Company’s decision whether or not to maintain a stockholding will depend on whether that investee is deemed likely to improve said profitability. At the same time, the Company will negotiate its divestment of their stock with those judged to be incapable of improving profitability. Also, the Company regularly monitors the status of investees whose stock performance falls short of this standard while periodically checking on the progress of negotiations aimed at selling the stocks of underperforming investees. In addition, as a result of the verification, there are instances when the Company sells stocks that are considered to be held fairly in consideration of market conditions and the Company’s business and financial 4 As a result of the aforementioned activities, in fiscal 2020 the Company sold listed stock totaling ¥11.6 strategies. billion on an acquisition-cost basis. Principle 1.7: Related Party Transactions The Company has set forth procedures that should be followed prior to engaging in business transactions with related parties and presented said procedures in Article 5 of the Basic Corporate Governance Policy (Approval of Transactions with Parties Concerned). Supplementary Principle 2.4.1: Ensuring Diversity in the Promotion of Core Human Resources Concepts on ensuring diversity Having experienced a management crisis (“Resona Shock”) immediately after its inauguration in 2003, the Resona Group has positioned diversity management as a cornerstone for human resource management, striving to empower all employees, regardless of gender, age or nationality, to realize their full potential and achieve career success. In recent years, the business environment has been evolving radically due to the ongoing globalization of economies and rapid advances in AI and other technologies, with new operational models quickly becoming obsolete and being superseded by another. Accordingly, businesses are being called upon to constantly take on the challenge of transformation in ways that defy past experience or prevailing norms. To secure its ability to continuously deliver new value supporting its customers’ happiness, the Resona Group continuously strives to transform itself into a financial service group rich with creativity. This striving involves securing diverse human resources and encouraging mutual respect among them so that they are better positioned to learn different ways of thinking and discover new ideas which, in turn, lead to innovation. Furthermore, the Group expects its human resources to become true professionals equipped with strong specialist skills enabling the resolution of issues customers are confronting and with a personal dedication to enhancing the customers’ happiness. When it comes to promoting employees, the Group is focused on appreciating the personalities of candidates and their aspirations toward self-motivated career goals, no matter their gender or years of service. human resources realize their potential and take full advantage of input from for differing value systems. Current status of and targets for diversity The Resona Group is striving to secure workforce diversity as outlined below to achieve value creation supported by diverse employees who strive to understand each other’s differences in ways of thinking, respect and inspire one another and proactively incorporate new ideas from their peers. a. Women The Group is proactively empowering women to achieve ambitious career paths, and its ratio of female line managers*1 surpassed 30% (sum of Resona Bank and Saitama Resona Bank) in April 2020. Also, the Group announced its targets for the empowerment and promotion of women as part of Long-Term Sustainability Targets disclosed in June 2021. Specifically, the Group aims to achieve the below presented ratios for the representation of women in various positions, an increase of 10% or more from the current levels, by the end of fiscal 2030. Ratio of female Directors and Executive Officers at Resona Holdings: 30% or more Ratio of female senior managers at six Group companies: 20% or more*2 Ratio of female line managers at six Group companies: 40% or more*2 *1 Those in managerial positions or above charged with overseeing staff *2 Sum of Resona Holdings, Resona Bank, Saitama Resona Bank, Kansai Mirai Financial Group, Kansai Mirai Bank and Minato Bank Latest results Based on the concepts discussed above, the Group is promoting diversity & inclusion to help diverse 5 Ratio of female Directors and Executive Officers at Resona Holdings: 19.2% (as of June 23, 2021) Ratio of female senior managers at six Group companies: 9.8% (as of March 31, 2021) Ratio of female line managers at six Group companies: 28.9% (as of March 31, 2021) b. Mid-career hires At the Resona Group, the number of mid-career hires being promoted to managerial positions currently totals approximately 630. With regard to the promotion of mid-career hires, the Group takes their experience in previous employment into account while applying the same criteria as those applied to candidates who join the workforce as new graduates. In April 2021, the Group revised its personnel system, instituting a multi-path personnel system designed to help each employee enhance their strengths in areas of specialty. Building on this system, the Group is developing an environment in which mid-career hires are empowered to realize their full potential and play even greater roles in their respective fields. Moreover, the Group intends to promote mid-career hires so they serve as driving forces toward its goal of increasing the sophistication of its financial services for future generations. These efforts are also undertaken in line with the reform of the human resource portfolio to align with changes in the business model. Looking ahead, as the Group plans to raise the proportion of mid-career hires in new hires, the ratio of mid-career hires to the overall number of managers is expected to grow. Policies for and the status of human resource training and the development of an in-house environment toward securing workforce diversity To help diverse human resources achieve success, the Group is striving to increase work style options available to employees while extending assistance to those endeavoring to strike a balance between childrearing, nursing care or other life events and their duties. Moreover, the Group is developing an environment supportive of employees’ autonomous career development efforts. Increasing work style options available to employees The Group is striving to offer a variety of work style options as part of efforts to develop a working environment in which every employee is empowered to pursue success regardless of time or other constraints. To this end, employees in all job categories are allowed to adopt a variable working hour system. Furthermore, they are enabled to utilize a discretionary labor system or flextime under certain conditions so that they can choose optimal work styles in line with the nature of their respective duties. In addition to full-time employee and partner employee positions, the Group also introduced “smart employee” positions, in which employees are allowed to work shorter working hours and are given more limited jobs, an option designed to accommodate the need for optimal work-life balance. The Group also expanded the scope of employees eligible for remote working to all employees while utilizing branch meeting rooms as satellite offices, with the aim of increasing options available to employees in terms of working locations. Helping employees strike a balance between life events and duties The Group has maintained programs granting childcare-related leave and otherwise allowing cessation from work for childcare in addition to enabling employees taking on childrearing to adopt shortened working hours. Moreover, the Group extends assistance to those expecting to be reinstated from childcare leave by, for example, holding various seminars. In these ways, the Group strives to develop a supportive environment for those endeavoring to strike a balance between work and childrearing. In addition, the Group aims to encourage male employees who are fathers to transform their work styles and raise their awareness of the need to strike a balance between work and childrearing. To this end, the Group has identified a specific target for the ratio of male employees who take childcare leave and is striving to encourage the utilization of childcare leave among this employee group. For employees engaged in nursing care, the Group endeavors to enhance the content of related programs, such as those granting nursing care leave and those allowing shortened working hours. The Group has also prepared a guidebook to ensure employee understanding of these programs while regularly holding seminars. These systematic efforts are intended to alleviate a sense of anxiety among employees regarding nursing care and enable them to utilize the above programs whenever necessary so that they can continue to work with confidence. 6 Assistance for autonomous career development Upon the April 2021 revision of the personnel system, the Group adopted a multi-path personnel system to promote the transition to a human resource portfolio with a greater focus on securing diverse workers boasting strengths in their areas of specialty. The new system is a course-based system that offers a total of 19 career paths encompassing various operational areas. Furthermore, we began providing employees with options regarding retirement age, which can range between age 60 and age 65, as part of efforts to push ahead further with diversity & inclusion. In conjunction with the revision of the personnel system, the Group has established a helpdesk through which specialist staff provide career counseling and has also restructured an existing system for internally soliciting candidates for personnel transfer in line with their desires for new assignments. We also began holding round-table meetings aimed at helping attendees learn about operations handled by headquarters as well as the details of the aforementioned courses offered via the new personnel system. As such, we are striving to develop a comprehensive structure for assisting employees in their autonomous career development efforts. For details on the Group’s diversity & inclusion initiatives, please visit the following page of our corporate website. https://www.resona-gr.co.jp/holdings/english/sustainability/sdgs/human_rights/diversity.html Principle 2.6: Roles of Corporate Pension Funds as Asset Owners The Group established a fund-based corporate pension system. Resona Bank and Saitama Resona Bank have established Resona Corporate Pension Fund while Kansai Mirai Bank has established Kansai Mirai Corporate Pension Fund and the Minato Bank has established Minato Bank Corporate Pension Fund (hereinafter the “Funds”). The Funds are charged with the management of pension assets associated with defined benefit pension plans, the payment of pensions and other pension-related administrative tasks. The Group Banks are systematically allocating to their respective Funds human resources who are appropriate for managing assets. For example, Resona Holdings assigns to the Resona Corporate Pension Fund human resources who have worked for such subsidiaries as Resona Bank and who are equipped with experience in securities management and pension trusts. In this way, the Group Banks are ensuring that their respective Funds are capable of independently determining asset management methodologies as well as undertaking proactive risk management and thus fulfilling specialist roles as asset owners. In addition, the Resona Corporate Pension Fund has announced its adherence to Japan’s Stewardship Code. The Funds mandate that such important matters as making changes to their constitutions, drafting annual budgets, business reporting, announcing financial results and managing pension assets must be approved by their respective boards of representatives. The Funds also mandate that one half of the membership of the Group Banks’ boards of representatives consists of those appointed by their respective companies, with the other half consisting of those elected from among pension beneficiaries via mutual election. Moreover, directors elected from among the members of a board of representatives and the Group Banks’ personnel in charge of human resources, financial affairs, market-related operations and other key operations attend periodic Asset Management Committee meetings to engage in discussions aimed at formulating and reviewing basic policies for asset management. In these ways, the Group Banks are ensuring the proper management of conflicts of interest between corporate pension beneficiaries and themselves. Principle 3.1: Full Disclosure 1. Company objectives (e.g., business principles), business strategies and business plans The Company formulated the “Corporate Mission (Resona Group Management Philosophy),” a general philosophy of management of the Group, and the “Resona Way (Resona Group Corporate Promises),” a specific form of the philosophy, under which the Group shall implement business operations in a concerted manner. These are presented under I. 1. “Basic Views” of this report. https://www.resona-gr.co.jp/holdings/english/about/strategy/plan.html 2. Basic views and guidelines on corporate governance Presented under I. 1. “Basic Views” of this report. 3. Board policies and procedures in determining the remuneration of the senior management and 7 In addition, the Company announced its “New Medium-term Management Plan” in May 2020. directors Policies and procedures adopted by the Company’s Compensation Committee to determine the remuneration of the Company’s directors and executive officers are presented under II. 1. “Remuneration for Directors and Executive Officers, Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods” of this report and Articles 13 (Compensation Committee) and 14 (Compensation System) of the Basic Corporate Governance Policy. 4. Board policies and procedures in the appointment and dismissal of the senior management and the nomination of directors Policies and procedures adopted by the Company’s Nominating Committee to appoint candidates for the Company’s directors and those adopted by the Board of Directors to appoint candidates for executive officers (including Representative Executive Officer) are presented under II. 1. “Independent Directors, Matters Relating to Independent Directors, Outline of the ‘Standards for Electing Director Candidates’” of this report and Articles 11 (Election of Executive Officers, etc.) and 12 (Nominating Committee) of the Basic Corporate Governance Policy. In addition, the Company is striving to ensure the effectiveness of its policies and procedures through the following measures, with the aim of systematically securing objectivity, timeliness and transparency in the dismissal of executive officers. Specifically, the Board of Directors, whose majority is accounted for by outside directors, is authorized to dismiss executive officers, including the President, if, for example, their accomplishments have been deemed insufficient. Also, members of the Nominating Committee are kept informed about evaluation results for each executive officer’s performance while regularly deliberating on the suitability of key individuals serving as executive team members and President. 5. Reasons for the election of director candidates, including those who will concurrently serve as Representative Executive Officers Reasons for the election of such director candidates are presented in reference documents attached to the Notice of Convention of the 20th Ordinary General Meeting of Shareholders. https://www.resona-gr.co.jp/holdings/english/investors/stock/meeting/pdf/notice20210526.pdf Supplementary Principle 3.1.3: Initiatives on Sustainability and Investments in Human Capital and Intellectual Properties Initiatives on sustainability Simultaneously pursuing the creation of a sustainable society and sustainable corporate growth, the Company has positioned ensuring “resonance” between these two endeavors as its medium- to long-term management vision. As Japan’s largest retail/commercial banking group with full-line trust banking capabilities, the Group has clearly defined the role it must fulfill to this end. Namely, the Group is determined to “assist customers, mainly in the retail field to promote sustainability transformation (SX) through its financial services” and “effect a significant movement toward SX for society as a whole by supporting corporate and individual customers undertaking initiatives.” We have also defined our vision of what the Resona Group must look like once it is fulfilling its role as discussed above. Specifically, in striving to update the Group’s business model, we intend to help customers embrace new lifestyle norms so that we can together adapt to change. In this regard, we aim to become the most significant contributor to customer success in SX. To realize the above vision, in June 2021 the Group announced Long-Term Sustainability Targets, which were built on “Resona Sustainability Challenge 2030” announced in November 2018. The Group has thus clarified the direction and time frames for its sustainability initiatives and is aligning the formulation and execution of its management strategies accordingly. For details on the Resona Group’s sustainability initiatives and other information disclosed in accordance with the TCFD guidance, please refer to the section titled “Accelerating SDG-Oriented Management” featured in the Integrated Report issued by the Company. https://www.resona-gr.co.jp/holdings/english/investors/financial/integrated/pdf/20/ir21_07.pdf 8 Investments in human capital and intellectual properties The Company has positioned human capital and intellectual capital as key elements supporting its medium- to long-term vision, namely, ensuring resonance between the creation of a sustainable society and the Group’s sustainable growth. For the Company to achieve sustainable improvement in corporate value, each officer and employee must be able to think and act in the best interests of their customers even as they continue to create new value on diverse fronts. We also believe that, along with the Company’s diverse human resources, its leading-edge systems and digital platforms similarly serve as a driving force of value creation as these assets help it create highly convenient and accessible services while pushing ahead with DX to promote the reallocation of human resources via improvement in the productivity of clerical processes. In the course of developing these assets, the Company has accumulated unique know-how that, in turn, constitutes valuable intellectual capital. The investment in human and intellectual capital discussed above has been undertaken through initiatives aimed at developing human resources, promoting diversity and rebuilding our foundations in line with the medium-term management plan (MMP) currently being implemented. The detailed status of these initiatives is disclosed via the following publications. “Value Creation Model” (Integrated Report) https://www.resona-gr.co.jp/holdings/english/investors/financial/integrated/pdf/20/ir21_01.pdf “Enhancing Resona’s Strength—Rebuilding Our Foundations” (Integrated Report) https://www.resona-gr.co.jp/holdings/english/investors/financial/integrated/pdf/20/ir21_06.pdf “Accelerating SDG-Oriented Management—Further Development × New Challenges” (Integrated Report) https://www.resona-gr.co.jp/holdings/english/investors/financial/integrated/pdf/20/ir21_07.pdf “Human Resource System” (corporate website) https://www.resona-gr.co.jp/holdings/english/sustainability/sdgs/human_rights/system.html “Diversity & Inclusion” (corporate website) https://www.resona-gr.co.jp/holdings/english/sustainability/sdgs/human_rights/diversity.html Supplementary Principle 4.1.1: The Scope and Content of Matters Delegated to the Management The scope of matters delegated to Executive Officers is defined by the Company’s Board of Directors and presented under Article 3 (System and Role of the Board of Directors) of the Basic Corporate Governance Policy. Supplementary Principle 4.1.3: The Succession Plan for Management Personnel Aiming for sustained improvements in corporate value, the Group introduced a succession plan in June 2007 that serves as a mechanism to ensure the successions of management roles and responsibilities to be borne by presidents and other officers at Resona Holdings, Kansai Mirai Financial Group and Group subsidiary banks in a way that secures the transparency of the process of selecting and nurturing officers. The scope of the succession plan covers various candidates, from those nominated to the position of President at Resona Holdings, Kansai Mirai Financial Group and Group subsidiary banks to those who are new candidates for officer positions. The process of selecting and nurturing successors is carried out steadily according to a schedule, matching qualified candidates to the appropriate rank. The Group retains the objectivity of this process by drawing on the advice of external consultants. Evaluations of candidates undergoing the process are reported to the Nominating Committee. In addition to receiving reports on candidate evaluations, members of the Nominating Committee come into direct contact with candidates as part of the process, evaluating candidates’ characters from various aspects. The activities of the Nominating Committee are reported to the Board of Directors, of which outside directors are the majority, and are discussed from diverse perspectives. Through the entire process, which is highly transparent, each potential director’s capabilities and competencies are closely studied and enhanced where appropriate. In addition, Resona Holdings has set forth seven competencies that define the ideal individual for the position of officer. Resona Holdings is striving to ensure that the directors in the Nominating Committee as well as officers share common ideals established thusly. This ensures that the standards for the evaluation and nurturing of successors are clear and that the entire process is impartial. 9 Supplementary Principle 4.2.2: Basic Policy for the Company’s Sustainability Initiatives The Company’s Board of Directors has engaged in intensive discussions regarding the role to be fulfilled by the Resona Group and its vision for what the Group must look like in the future in the context of its medium- to long-term management vision, namely, ensuring resonance between the creation of a sustainable society and the Group’s sustainable growth. The Board of Directors thus defined the Group’s role and vision as follows. Role to be fulfilled: Assist customers, mainly in the retail field to promote sustainability transformation (SX) through its financial services as the largest retail/commercial banking group in Japan with full-line trust banking capabilities. Effect a significant movement toward SX for society as a whole by supporting corporate and individual customers undertaking initiatives. Vision: In striving to update the Group’s business model, we help customers embrace new lifestyle norms so that we can together adapt to change. We aim to become the most significant contributor to customer success in SX. We also believe that, if we are to realize our medium- to long-term management vision, we must continuously deliver new value in a way that aligns with changes in society and customers’ modes of financial behavior. With this in mind, we are promoting the further development of existing businesses under the MMP while taking on the challenge of creating new businesses in addition to rebuilding our foundations to support these endeavors. Furthermore, we are systematically reallocating our human resources to achieve success in the above endeavors, to this end having determined our areas of focus and prioritized these areas in the distribution of management resources. The status of progress under such MMP initiatives as rebuilding our foundations, distributing management resources to our areas of focus and reallocating human resources, is monitored by the Board of Directors. Principle 4.8: Effective Use of Independent Directors The Company’s policies on the number of its directors, including independent directors, and the minimum proportion of independent directors in the Board are presented under Article 3 (System and Role of the Board of Directors) of the Basic Corporate Governance Policy. members, six of whom are independent directors. Principle 4.9: Independence Standards and Qualification for Independent Directors The independence standards and qualifications for outside directors set forth by the Company are presented under II. 1. “Independent Directors, Matters Relating to Independent Directors, Outline of the ‘Standards for Election Director Candidates,’ Independence of Outside Directors” of this report. Supplementary Principle 4.11.1: Views on the Balance, Diversity and Size of the Board The Company’s views on the knowledge and experience of members of its Board of Directors as well as the balance, diversity and size of the Board as a whole are presented under Article 3 (System and Role of the Board of Directors) of the Basic Corporate Governance Policy. As of the date of the announcement of this report, the Company’s Board of Directors consists of nine The Company considers ensuring diversity and active discussion informed by the varied experience and specialties of each Director will lead to enhanced supervisory and decision-making functions of the Board of Directors. The experience, skills and specialties of each candidate for Director are presented in the Notice of Convention of the 20th Ordinary General Meeting of Shareholders. https://www.resona-gr.co.jp/holdings/english/investors/stock/meeting/pdf/notice20210526.pdf Supplementary Principle 4.11.2: The Status of Directors’ Concurrent Positions Director Kazuhiro Higashi is concurrently serving as an outside director of the listed companies Sompo Holdings, Inc. and Honda Motor Co., Ltd. The status of concurrent director positions held by the Company’s outside directors is presented under II. 10 None of the other directors holds a concurrent position as a senior executive or a director at a listed 1. “Outside Directors, Outside Directors’ Relationship with the Company (2)” of this report. company. Supplementary Principle 4.11.3: Analysis and Self-Evaluation of the Board’s Overall Effectiveness Outline and Results of Self-Evaluation: As presented in Article 9 (Self-Assessment) of the Basic Corporate Governance Policy, the Company’s Board of Directors conducts an annual analysis and evaluation of its overall effectiveness. To this end, each director’s assessment of the operations and functionality of the Board as well as their opinions regarding matters discussed at the Board of Directors meetings are collected. In fiscal 2020, a third-party evaluation agency was commissioned to conduct the self-evaluation, including an interview of each director in addition to a questionnaire* to be completed by each director. The latest self-evaluation has thus been carried out employing the updated questionnaire, which addresses such issues as the Board of Directors’ roles and functions within the Group and its composition as well as the status of operations the Board has undertaken and its responses to issues identified by the previous year’s self-evaluation. Moreover, outside directors examined the content of questionnaire completed by each director and engaged in discussion aimed at defining the aspirational ideal for how the Board of Directors should operate and its current status vis-à-vis this ideal. Based on the conclusions reached at the outside directors’ meeting, the Board of Directors met in April 2021 to finalize the evaluation of its fiscal 2020 activities and determine what must be done going forward to address issues it has identified. The fiscal 2020 self-evaluation concluded that the Board deserved high evaluations for most of the major items related to effectiveness, such as its role and composition. The self-evaluation confirmed that countermeasures were taken and improvements were made with regard to matters identified as needing attention in the fiscal 2019 self-evaluation, namely, engaging in even more effective discussion vis-à-vis the Resona Group’s overall strategies and further enhancing Board deliberations. Taking the aforementioned factors into account, the evaluation thus concluded that the overall functions of the Board were robust and its operations remain highly effective. On the other hand, the evaluation suggested that discussions from a Groupwide and medium- to long-term perspective are still insufficient and that there is still room for improvement when it comes to setting discussion topics and the content of materials. Fiscal 2021 Initiatives to Enhance the Board’s Effectiveness In fiscal 2021, the Company’s Board of Directors will address the issues listed below by further strengthening and utilizing its oversight and decision-making functions. (1) To further set discussion themes as the Board throughout the year and further clarify the direction of discussion at Board meetings, the Board will set new yearly themes that will help it better utilize its oversight functions on various strategies from a Groupwide perspective. In addition, the Board will continue fostering free discussions related to strategies from a long-term perspective. (2) Strengthening initiatives to promote the understanding of deliberations To deepen the understanding of outside directors regarding the environment surrounding various initiatives in business execution divisions and the Company, the Board will hold opinion exchange meetings with business execution divisions in addition to study sessions. In addition, regarding pre-meeting briefings for outside directors, the Board will continue to enhance deliberation content at Board meetings by reforming the secretariat into a structure that follows up with individuals in addition to having each management division hold joint pre-meeting briefings to explain items directly to outside directors. *Main items featured in the revised questionnaire Roles and functions of the Board of Directors (roles the Board is expected to fulfill going forward, the composition of the Board, functions of Chairman, functions of lead outside directors, etc.) Size and composition of the Board of Directors’ membership (the number of members, proportions of in-house and outside individuals, the ideal for the Board’s composition to be realized going forward, etc.) The status of the Board of Directors’ operations (meeting frequency, the content of agenda items, the content and quality of meeting materials, risk allowance level, etc.) 11 Response to issues identified in the course of the previous year’s self-evaluation Compositions and roles of the committees (Nominating, Compensation and Audit) A system for supporting outside directors Relationships with investors and shareholders The overall effectiveness of the Resona Group’s governance structure and the Board of Directors’ operations Self-evaluation of individual directors’ performance The status of the operations of the committees (Nominating, Compensation and Audit) Note: For details of fiscal 2020 self-evaluation results, please also refer to the following material posted on the Company’s website. https://www.resona-gr.co.jp/holdings/english/about/governance/pdf/evaluation.pdf Supplementary Principle 4.14.2: Training Policies for Directors The Company’s policies for the training of its directors are presented under Articles 6 (Qualifications and Roles of Directors) and 8 (Acquisition of Information by Outside Directors and Information Sharing) of the Basic Corporate Governance Policy. Principle 5.1: Policy for Constructive Dialogue with Shareholders The Company established the Basic Policy for Promoting Constructive Dialogues with Shareholders, Investors, etc., and discloses the policy through the following medium. Outline of Basic Policy for Promoting Constructive Dialogues with Shareholders, Investors, etc. http://www.resona-gr.co.jp/holdings/english/about/governance/pdf/related_policies1.pdf For more details on the Company’s IR activities, please also refer to III. 2. “IR Activities” of this report. Principle 5.2: Establishing and Disclosing Business Strategy and Business Plan Resona Holdings is determined to remain true to its fundamental philosophy of “Customers’ happiness is our pleasure.” By doing so, the Company aims to become the industry leader in terms of retail banking. Specifically, the Company is striving to become the financial service group of choice for customers in communities around Japan and to continue to engage with them in a way that leads to mutual prosperity well into the future. In Japan, changes in the social structure are accelerating and irreversible. They include demographic decline and graying, rapid digitalization, and the continued diversification of consumer behavior. Moreover, in addition to prompting the prolongation of a negative interest rate policy, the COVID-19 pandemic has severely affected the global economy, including economic trends in Japan. Domestic economic activities—production through consumption—are currently stagnant due to travel and social restrictions. The environmental changes described above are expected to extend over the medium and long terms, with businesses facing a growing need to ensure their responsiveness in the face of the unexpected. Given this, the Resona Group aims to transition from a conventional to a new business model that better aligns it with the changing times. As it considers “contributing to the creation of a sustainable society while achieving sustainable corporate growth” over the medium to long term via such transition a matter of significant importance, the Group announced the new medium-term management plan, which lays out its vision for the future and spans the three-year period ending fiscal 2022, in May 2020. In the new plan, the Group has positioned establishing the “Resonance Model” as a basic policy. This means starting with issues confronting customers and society, the Group will provide new value to customers through diverse resonance generated by moving beyond conventional banking frameworks. Basic Policy In establishing the Resonance Model, we will adapt to changing times and provide new value to customers, starting with issues that customers and society at large are confronting and then moving beyond conventional banking frameworks supported by the diverse resonance generated by new ideas and wide-ranging connections. By positioning the Resonance Model as a central axis of thinking and action for every employee, we will achieve the aims of the plan. 12 Business Strategies We will work to thoroughly differentiate our traditional indirect financing operations (trust and commercial banking) through further development. At the same time, we will take on new challenges, pursuing innovative businesses ideas that break the bank model mold. Thus, over the medium to long term, we will evolve into a group that offers next-generation retail services and reform our earnings structure. Rebuilding Our Foundations The success of our efforts to further develop and take on new challenges, requires that we dismantle the costly structure that our retail businesses comprise to allow the more efficient allocation of management resources. Focusing on the three drivers, “Digital & Data,” “Design-based Thinking” and “Open,” we will rebuild our business model and management foundations as we work to reinforce our sales capabilities and raise productivity. Key Performance Indicators Key performance indicator targets for the final year of the Plan are as shown below. Net income attributable to owners of the parent Consolidated fee income ratio Consolidated cost income ratio ROE*1 CET 1 ratio*2 ESG Index selected by GPIF*3 *1 Net income / Total shareholders’ equity (simple sum of the balance at the beginning and the end of the term) *2 Based on the finalization of Basel 3. Excludes unrealized gain on available-for-sale securities *3 FTSE Blossom Japan Index, MSCI Japan ESG Select Leaders Index, MSCI Japan Empowering Women Index (WIN), S&P/JPX Carbon Efficient Index Series 2. Capital Structure Percentage of Foreign Shareholders: ¥160 billion Over 35% 60% level 8% level 10% level Aim to be adopted for all indexes More than 30% [Status of Major Shareholders] Shareholder The Master Trust Bank of Japan, Ltd. (Trust Account) Custody Bank of Japan, Ltd. (Trust Account) The Dai-ichi Life Insurance Company, Ltd. Nippon Life Insurance Company Custody Bank of Japan, Ltd. (Trust Account No. 7) AMUNDI GROUP STATE STREET BANK AND TRUST COMPANY 505001 THE BANK OF NEW YORK MELLON 140044 JPMorgan Chase & Co. STATE STREET BANK WEST CLIENT = TREATY 505234 Number of Shares Held 162,188,300 119,943,000 106,241,900 65,488,095 49,270,700 45,133,700 43,076,474 38,380,438 34,560,176 33,291,699 Percentage of Shares Held 7.04 5.21 4.61 2.84 2.14 1.96 1.87 1.66 1.50 1.44 Controlling shareholder (except for parent company) Parent company None None Supplementary Explanation None 3. Corporate Profile 13 Listed Stock Market and Market Section: First Section, Tokyo Stock Exchange Fiscal Year-End: March 31 Type of Business: Bank Number of Employees (consolidated) as of the End of the Previous Fiscal Year: Sales (consolidated) as of the End of the Previous Fiscal Year: Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year: More than 1000 ¥100 billion to less than ¥1 trillion 10 to less than 50 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder None 5. Other Special Circumstances That May Have Material Impact on Corporate Governance None II. Business Management Organization and Other Corporate Governance Systems regarding Decision Making, the Execution of Business, and Management Oversight 1. Organizational Composition and Operation Organization Form: Company with a nominating committee, etc. [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation: Term of Office Stipulated Incorporation: in Articles of 15 1 year Chairman of the Board of Directors Chairman Number of Directors [Outside Directors] Number of Outside Directors: Number of Outside Directors Designated as Independent Directors Pursuant to the Securities Listing Regulations of the Tokyo Stock Exchange 10 6 6 14 d Status Name a b Outside Directors’ Relationships with the Company (1) Relationship with the Company (Note) j f i g h ○ ○ ○ ○ ○ ○ △ c e Appointed from another company Lawyer Appointed from another company Appointed from another company Appointed from another company Appointed from another company Tadamitsu Matsui Hidehiko Sato Chiharu Baba Kimie Iwata Setsuko Egami Fumihiko Ike Note: Nature of the relationship with the Company is indicated using the following symbols: ○: Indicates the situation described below applies at present or in the recent past △: Indicates the situation described below applied in the past ●: Indicates the situation described below applies to a close family member of the individual at present or in the recent past ▲: Indicates the situation described below applied to a close family member of the individual in the past a. Engages in business execution at the listed company or its subsidiary b. Engages in business execution at the listed company’s parent company or serves as a non-executive director c. Engages in business execution at a fellow subsidiary of the listed company d. Engages in business transactions with the listed company as his/her main business partner or engages in k business execution at a company that engages in such transactions e. Acts as a main business partner of the listed company or engages in business execution at a company that acts as a main business partner of the listed company f. Serves as a consultant, accounting specialist or attorney-at-law for the listed company and receives a considerable amount of remuneration or compensation other than executive remuneration g. Holds considerable equity in the listed company or engages in business execution at a company that holds such equity h. Engages in business execution at a company that has business transactions with the listed company (excluding the above “d,” “e” or “f ”; this clause does not apply to family members of outside directors) i. Engages in business execution at a company that is in an inter-directorial relationship with the listed company (this clause does not apply to family members of outside directors) j. Engages in business execution at a company that is a beneficiary of the listed company (this clause does not apply to family members of outside directors) k. Other 15 Outside Directors’ Relationships with the Company (2) Name Reasons for Appointment Designation as Independent Director Supplementary Explanation of the Relationship Membership of Committees (Nominating, Compensation or Audit committees) Nominating and Compensation committees Tadamitsu Matsui Independent Director Representative Director and President of MATSUI office corporation. Outside director of Adastria Co., Ltd. Outside director of NEXTAGE Co., Ltd. Outside director of Festaria Holdings Co., Ltd. Outside director of New Constructor’s Network Co., Ltd. Hidehiko Sato Nominating and Audit Committee Independent Director Lawyer; Hibiki Law Office Outside director of Gurunavi, Inc. 16 Mr. Matsui proactively brings to the Board of Directors and other committees sound opinions and advice, especially from the perspective of facilitating reforms in management and customer services, employing his concept building capabilities and experience that he has nurtured through his service as a chief executive officer in the retailing business. Leveraging such capabilities and experience as well as his independent status vis-à-vis the management of the Company’s daily business, Resona Holdings anticipates that Mr. Matsui will continue to oversee the affairs of the Company without causing conflicts of interest with general shareholders. Mr. Matsui attended all of the 16 Board of Directors meetings, all of the 11 Nominating Committee meetings and all of the seven Compensation Committee meetings held during fiscal 2020. Mr. Matsui had held his position as an outside director of Resona Holdings for a period of seven years as of the close of the Company’s General Meeting of Shareholders held in June 2021. Mr. Sato proactively brings valuable comments and opinions to the Board of Directors and other committees, especially from the perspectives of legal compliance and organization management, employing his knowledge as an expert in law and experience as a government official. Leveraging his knowledge and experience as well as his independent status vis-à-vis the management of the Company’s daily business, Resona Holdings anticipates Mr. Sato will continue to oversee the affairs of the Company without causing conflicts of interest with general shareholders. Mr. Sato attended all of the 16 Board of Directors meetings, all of the 11 Nominating Committee meetings and all of the 13 Audit Committee meetings held during fiscal 2020. Mr. Sato had held his position as an outside director of Resona Holdings for a period of six years as of the close of the Company’s General Meeting of Shareholders held in June 2021. Mr. Baba proactively brings sound opinions and advice to management, especially from the perspective of profit management and risk management, based on his knowledge and experience as an expert in finance. Leveraging his concept building capabilities and experience as well as his independent status vis-à-vis the interest with general shareholders. Mr. Baba attended all of the 16 Board of Directors meetings and 12 of the 13 Audit Committee meetings held during fiscal 2020. Mr. Baba had held his position as an outside director of Resona Holdings for a period of four years as of the close of the Company’s General Meeting of Shareholders held in June 2021. Ms. Iwata proactively brings sound opinions and advice to management, especially from the perspectives of customer service and diversity, as she has built a solid track record in corporate management in the manufacturing field and thereby developed robust conceptualization capabilities. She also Chiharu Audit Committee Independent Director Outside director of Baba will continue to oversee the affairs of Baba MIRAIT Holdings Corporation the Company without causing conflicts of business, Resona Holdings anticipates Mr. Kimie Iwata Nominating and Metropolitan Government business, Resona Holdings anticipates Ms. Independent Director Compensation committees Leveraging her experience and abilities as Audit and inspection well as her independent status vis-à-vis the commissioner of the Tokyo management of the Company’s daily Outside director of Sumitomo Iwata will continue to oversee the affairs of Corporation the Company without causing conflicts of Outside director of Ajinomoto interest with general shareholders. Ms. Co., Inc. Iwata attended 14 of the 16 Board of Directors meetings, nine of the 11 Nominating Committee meetings and all seven Compensation Committee meetings held during fiscal 2020. Ms. Iwata had held her position as an outside director of Resona Holdings for a period of two years as of the close of the Company’s General Meeting of Shareholders held in June 2021. 17 Setsuko Independent Director Ms. Egami proactively brings to bear her Egami opinions and advice, especially from the human resource development, based on Outside director of Mitsubishi her experience in spearheading corporate Estate Co., Ltd. management reforms. Leveraging her Nominating and Compensation committees experience and abilities as well as her independent status vis-à-vis the management of the Company’s daily business, Resona Holdings anticipates Ms. Egami will be able to oversee the affairs of the Company without causing conflicts of interest with general shareholders. Ms. Egami attended all 12 of the Board of Directors meetings, all eight of the Nominating Committee meetings and all four of the Compensation Committee meetings held during fiscal 2020 since she joined the Board of Directors. Ms. Egami had held her position as an outside director of Resona Holdings for a period of one year as of the close of the Company’s General Meeting of Shareholders held in June 2021. Mr. Ike is expected to proactively bring to bear his opinions and advice, especially from the perspective of management reforms, based on his expertise in IT and his experience as a manager in the field of global manufacturing. Leveraging his experience and abilities as well as his independent status vis-à-vis the management of the Company’s daily business, Resona Holdings anticipates Mr. Ike will be able to oversee the affairs of the Company without causing conflicts of interest with general shareholders. Fumihiko Ike Independent Director Nominating and Audit Committee Outside director of NTT DATA Corporation Outside director of Eisai Co., Ltd. 18 [Committees] Committee Composition and Chairman Total Number of Committee Members Full-time Members Inside Directors Outside Directors Chairman [Executive Officers] Number of Executive Officers: 18 Status of Concurrent Positions Name Representative Authority Concurrent Position Held (Director) Nominating Committee Compensation Committee Concurrent Position Held (Employee) Nominating Committee Compensation Committee Audit Committee Masahiro Minami Mikio Noguchi Shoichi Iwanaga Satoshi Fukuoka Tetsuya Kan Kazuyo Shinya Mikiko Ariake Takashi Terahata Shigeki Ishida Hisahiko Oikawa Hideki Taha