セガサミー（6460） – INTEGRATED REPORT 2021 (3/3)

The SEGA SAMMY Group’s Value Creation and MaterialityValue Created by Our BusinessesMateriality to Be Addressed and Key CategoriesValue Creation in Core BusinessMateriality to Be AddressedKey CategoriesRelated SDGsEntertainment Contents BusinessWe design products with a view to lowering the environmental burden of manufacturing processes and enhancing efficiency through recycling and reuse. Further, we are advancing efforts to preserve the environment and reduce power consumption. Reduce Environmental BurdenAdd color to life by providing experiences that move the heart through games and other entertainment.Pachislot and Pachinko Machines BusinessAdd stimulation to everyday life by providing experiences that move the heart through pachislot and pachinko machines.Resort BusinessAdd relaxation to life by providing experiences that move the heart through resorts.EnvironmentAddictionPeopleWe are taking steps to tackle and prevent different types of addiction, such as addiction to playing pachinko and pachislot machines; “gaming disorder,” which is an addiction to video games that seriously affects health; and gambling addiction, which is strongly related to the integratedresort business. Mitigate AddictionWe will strive to create motivating work environments for diverse human resources and build a corporate culture with a high level of creativity. We also aim to make diversity an inherent part of our business, while also ensuing fairness by respecting human rights, prohibiting discrimination ofany kind and protecting disadvantaged people. Enhance Job Satisfaction Increase Diversity Eliminate InequalityProducts and ServicesIn order to create experiences that move the heart through entertainment to make life more colorful, we will build development processes that allow us to provide innovative products, continually improve the quality of products and services, and supply products and services that can beenjoyed with safety and confidence. Develop Innovative Products Improve the Quality of Products and Services Supply Safe and Trusted ProductsGovernanceWe will emphasize corporate governance, including compliance and risk management, strengthen legal compliance frameworks and internal control systems, ensure sound business management, enhance transpar-ency and improve efficiency through rigorous governance management. Reinforce Governance4647In accordance with our mission of Constantly Creating, Forever Captivating, we will work to realize a sustainable society and increase corporate value by responding to society’s needs. To achieve those objectives, we are focusing on creating value through the Group’s core businesses and identifying key issues in their operations (materiality). Referencing the Sustainability Accounting Standards Board (SASB) model, an external framework, we have defined materiality for the SEGA SAMMY Group and are working to communicate it across the Group.Realize a Sustainable Society and Increased Corporate Value Constantly Creating, Forever Captivating—Making Life More Colorful—SEGA SAMMY HOLDINGSINTEGRATED REPORT 2021EnvironmentAddictionPReducing Environmental Burden Caused by Business ActivitiesReuse and Recovery of Components from Pachislot and Pachinko MachinesSammy has been working to improve the reusability of pachislot and pachinko machine components by working from the design and development stages to standardize components, circuit boards, and units, and set targets for the number of reusable components in 2016. In the fiscal year ended March 2021, the recovery rate for reused components reached 89.7% and the recycling rate for pachislot and pachinko machines was 98.6%. Sammy will continue its efforts to maximize the benefits of reuse. Sammy is also working with other manufacturers to develop platforms for components and units as part of industry-wide efforts to reduce environmental impact.97.2100608040Sammy Pachislot and Pachinko Machine Recycling Ratio(%)96.095.095.498.6%20020172018201920202021(FY) We are improving the efficiency of reuse activities by expanding the range of reused components and increasing the ratio of stan-dardized components and materials. Environmental Indicators at Sammy’s Kawagoe Factory See page 57 for more detailsPCaring for the Global Environment and ResourcesPromoting Reuse across the Value ChainThe Group is pursuing optimization in all areas of the pachislot and pachinko machine value chain, including development, manufactur-ing, and sales. Through these efforts, we aim to reduce environmen-tal impact by cutting back on component use while also promoting the reuse of components, which is supporting an improvement in business profitability.Promoting Reuse across the Value ChainDesign and DevelopmentAt the design and development stages, we are designing products with reuse in mind, including measures such as promoting common components and increasing the range of reused components.ProductionAt the production stage, we have consoli-dated previously dispersed component warehouse functions at the site of the neighboring Kawagoe Factory and are facilitating efficient component recycling and reuse.SalesWe are striving to strengthen relationships with pachinko halls and establish a cycle of reuse and recycling by selling pachinko machine boards that help reduce invest-ments when introducing new machines.ReuseWaste DisposalThe Group seeks to ensure proper disposal of used pachislot and pachinko machines that have reached the end of their lives of bring-ing joy to customers. We therefore promote recycling by offering trade-in programs with regard to our own machines and by utilizing an industry association collection system. We also participate in the used pachislot and pachinko machine collection system developed by industry associations to implement more advanced recycling measures (reduction of weight and appropriate treatment).PAddiction Countermeasures in the Pachislot and Pachinko Machine IndustrySupport for the Helpline Services of the Recovery Support NetworkThe Group began to implement initiatives against addiction follow-ing the establishment of the Society for Research on Pachinko Addiction in 2003. The Recovery Support Network (RSN), which was created in 2006 with the support of various groups within the industry, has also introduced a wide range of initiatives, including awareness-raising activities and telephone helpline services. 2003 2018 Addiction Countermeasures in the Pachislot and Pachinko Machine Industry Establishment of the Society for Research on Pachinko Addiction2006 Establishment of the Recovery Support Network (RSN)2017 Release of a statement on pachinko/pachislot addictionActivities During Pachislot and Pachinko Addiction Awareness WeekPachislot and Pachinko Addiction Awareness Week is held in Japan every year from May 14 to May 20 with the aim of raising awareness about pachislot and pachinko addiction. Centered around Aware-ness Week, in addition to holding forums to broaden understanding of these issues, industry organizations are also engaged in Aware-ness Week poster campaigns and other activities. Replacement of pachislot and pachinko machines with new models that comply with amended regulations Establishment of the Advisory Council on Addiction Countermeasures in the Pachinko and Pachislot Industry (a committee of independent experts)2019 Formulation of Basic Guidelines for Addressing Pachinko Addiction Formulation of Basic Guidelines for the Pachinko and Pachislot Industry for Addressing Addiction2020 National Police Agency expresses expectations and urges cooperation at a meeting of the Board of Directors of the Japan Federation of Gaming Business AssociationsERAddressing Gaming Addiction in the Entertainment Contents BusinessCollaboration with Industry GroupsAt the World Health Assembly in May 2019, the World Health Orga-nization (WHO) recognized “gaming disorder” as a disease, defining it as a pattern of excessive online and video gaming. In Japan, the Computer Entertainment Supplier’s Association (CESA), the Japan Online Game Association (JOGA), the Mobile Content Forum (MCF), and the Japan eSports Union (JeSU) jointly established a study group to conduct surveys and research relating The four organizations are currently carrying out collaborative to phenomena triggered by gaming, and to educate the public about appropriate ways to enjoy gaming. surveys and research about gaming disorder and exploring countermeasures for the future. The Group will continue to address these issues appropriately in cooperation with the study group.Developing and Operating Safe, Trusted Integrated ResortsIndustry-academia joint research project on gambling addictionSEGA SAMMY HOLDINGS and Kyoto University are jointly con-ducting a process research project* on gambling addiction, which involves the collection and analysis of data on progression in gambling behavior. The purpose of this research is to discover advance warning signs of dangerous gambling behavior by collecting and analyzing playing data from casinos. systems for the early identification of players showing signs of addiction, so that steps can be taken to prevent escalation. We will also establish facility operations that encourage users to exercise self-control and restraint. In this way, we aim to develop an inte-grated structure for gambling addiction countermeasures, from education and prevention through to treatment in collaboration with The Group plans to use the results of this research to establish Studies to date have analyzed playing data. In particular, medical institutions and other organizations. research focused on examining the effects of prior wins or losses on subsequent betting behavior in the process of repeated gambling. Playing data for the card game baccarat were analyzed. Results from the joint research showed that repeated gambling behavior results in a tendency to increase the size of wagers, regardless of whether the gambler wins or loses, and that this pattern is especially conspicuous after a win. It was also found that the percentage of people who will engage in risky gambling tends to increase after repeated wins. These results were also published in the research journal International Gambling Studies.* This research project is being carried out from December 2017 to March 2023 at the Kokoro Research Center Kyoto University.48E Entertainment Contents Business P Pachislot and Pachinko Machines Business R Resort Business SS GroupE Entertainment Contents Business P Pachislot and Pachinko Machines Business R Resort Business SS Group49SEGA SAMMY HOLDINGSINTEGRATED REPORT 2021PeopleProducts and ServicesSSSSSSEnhance Job SatisfactionNew Personnel System Implemented (from April 2021)To realize our Mission of Constantly Creating, Forever Captivating, the Group is striving to Be a Game Changer. This is the shared com-mitment of the Group. We formulated The SEGA SAMMY Group Vision for HR Reform s as our guiding principles in the area of human resource development, with the aim of maintaining our role as an innovator in a rapidly changing business environment. The vision represents a departure from traditional human resource administra-tion styles based on seniority and on rigid structures. Its goal is to provide a strategic direction for change that will allow us to maxi-mize the core qualities leveraging diversity of each Group company and each individual while also realizing our strengths as a Group. We have also identified three elements and five priorities with the aim of creating fields in which personnel who demonstrate aspirations and high abilities can play an active role. development with the aim of instilling S.S. FIVE —Our Core Quali-ties— Drive, Empathy, Initiative, Control, Resolve as the basis for behaviors that leverage diversity. We will also maximize the value of our human assets across Group divisions by basing job appoint-ment and dismissal decisions on aspirations and abilities, and by reflecting results and contributions in remuneration.In addition, each Group company will approach human resource Developing Remote Working EnvironmentsTo ensure the safety of its employees during the COVID-19 pan-demic, the Group has adopted workstyles that combine remote and onsite work according to work and operational requirements. We will continue our efforts to prevent the spread of the disease while maintaining and improving productivity.The SEGA SAMMY Group Vision for HR ReformThree ElementsRealizing the Mission Pyramid is a shared and absolute axisShifting from a seniority-based system to one in which individuals who demonstrate aspirations and high abilities can succeed over the course of their challengesMaximizing opportunities for human resources to thrive across the GroupFive PrioritiesFulfilling respective roles needed to realize our missionEmployees working together to achieve shared missions, with each person taking on a challenging roleBehaviors leveraging diversity Employees driving innovation by leveraging each other’s diverse approaches and behaviorsAppointments and removals according to aspirations and abilitiesCreating a powerful sense of ownership and growth by appointing people to roles according to their ambitions and abilities as individuals, rather than a seniority-basedCompensation based on results and contributionsEnsuring well-balanced compensation based on each individual’s results and contributionsOpportunities to thrive across the Group Maximizing the value of the Group’s human assets by creating opportunities for organizational transfers between companies and organizationsSSIncrease Diversity and Eliminate InequalityPartnership Certificates for Same-Sex CouplesOne of the social issues faced by same-sex couples is the fact that they are not legally recognized as being married, with the result that they are unable to enjoy the rights and the services that are available to families as a matter of course. SEGA SAMMY HOLDINGS treats same-sex partners on an equal footing with spouses under its vari-ous internal systems. Currently, notarized declarations are required when making applications relating to a same-sex partner, but we also plan to accept partnership certificates issued by the Famiee Project.Declarations Condemning Racial DiscriminationIn June 2020, Sega of America, Inc. responded to growing support for the “Black Lives Matter” anti-racism movement by issuing a statement condemning discrimination against people of color. In addition, in March 2021, both Sega of America, Inc. and SEGA SAMMY HOLDINGS expressed their support for efforts to eradi-cate all forms of racial discrimination and violence following a rapid increase in the number of hate crimes being committed against people of Asian descent.PImprove Product and Service Quality; Supply Safe, Trusted ProductsSafety and Quality Assurance of Products and ServicesIn the Pachislot and Pachinko Machine Business, we provide safe, high-quality products and services through proactive ingenuity and effective quality improvement. We have also set a zero target for significant defects with the potential to affect safety.In response to suspicious solicitations for “sakura/uchiko” by people posing as representatives of the Company or SEGA SAMMY Group, as well as groundless walkthroughs and strategy guides that have been circulating in some areas of the market, we are implementing various countermeasures and encouraging cau-tion via the Sammy website, leaflets, and other means.1 Develop quality manuals and manage quality records2 Verify that the 4M* system is being properly implemented by suppliers, conduct audits and provide guidanceE3 Conduct process audits for production and testing for products in a high-temperature environment4 Optimize inspection specifications for movable accessories and evaluate performance with life testing5 Reinforce collaboration between development, sales, and pro-duction departments to improve product quality* Man, machine, material, methodQuality Assurance Activities (Pachislot and Pachinko Machines Business) Design review Reliability testing Inspection for defects First article inspectionMarketTrial production for mass productionPlanningDesigningQuality Assurance DepartmentProduct and Service LabelingIn the Consumer area of the Entertainment Contents Business, we label product packaging, user manuals and other tools for home video game software in accordance with the relevant laws and regu-lations, industry group guidelines, and internal rules. By applying clear and appropriate labels, we ensure that customers can use our products and services with confidence. We also clearly specify the range of users for each product and actively address any ethical concerns. Our products are labeled according to assessments conducted in countries around the world. In Japan, we indicate the target age group for each game based on the CERO* ratings system and also label products in accordance with our own volun-tary standards. By drawing on expertise accumulated through the CERO rating system and case studies, we have formulated guide-lines that cover nine categories and 26 items. We are also working to improve employee awareness by circulating information about recent ethical issues relating to expressions used in products in Japan and overseas through our email newsletter.* The Computer Entertainment Rating Organization (NPO)Includes no expressions or content subject to age classification; appropriate for all ages.ShippingManufacturing Includes expressions or content appropriate for those aged 12 and older. Spot check Inspection for defects Audit (suppliers and Sammy’s production processes) Includes expressions or content appropriate for those aged 15 and older.PMeasures Against Illegal Customer BehaviorThe Revised Amusement Businesses Law Enforcement Ordinance, in effect since July 2004, is primarily intended to control excessive gambling elements on pachislot and pachinko machines and pre-vent improper modifications. Adhering to this ordinance, the Pachis-lot and Pachinko Machines Business has established a special group to collect market information and build pachislot and pachinko machines that are resistant to abuse in order to prevent users from illegally manipulating the machines for illicit benefit. To combat improper modifications, which are becoming increasingly complex, we monitor and manage the distribution of pachislot and pachinko machines to completely eradicate any machines that have been illegally modified from the market.Includes expressions or content appropriate for those aged 17 and older.Includes expressions or content only appropriate for those aged 18 and older.(Category assuming the game will not be sold or distributed to persons under age 18)CERO Age Rating System Age Classification MarksThe inclusion of age classification marks and other information based on the content and expressions in computer and video games allows consumers to purchase and enjoy products with confidence. These marks are displayed on game software and other products sold in Japan for home use, with the exception of game software for commercial use. For more information on initiatives to expand IP value, see the Special Feature (pages 28-33)50E Entertainment Contents Business P Pachislot and Pachinko Machines Business R Resort Business SS GroupE Entertainment Contents Business P Pachislot and Pachinko Machines Business R Resort Business SS Group51SEGA SAMMY HOLDINGSINTEGRATED REPORT 2021ESG Risks and Countermeasures in the Value ChainRecognizing that the various ESG risks faced by different face-to-face markets and business models confront different types of risk, our group has taken steps to address these risks and has identified key themes for contributing to the SDGs.Pachislot and Pachinko Machines BusinessESG RisksEEnvironmental RisksSSocial RisksGGovernance RisksKey Themes for Contribution to SDGs1Environment2Addiction3People4Products and Services5GovernanceEntertainment Contents BusinessConsumer AreaPlanning and developmentDistribution and salesOperations and additional contents distribution In-house Outsourcing424Excessive use by minorsSCustomer supportSGame addictionSSocial problems associated with minors who incur excessive fees when playing games based on the Gacha system, which encour-ages gambling aspects, are not infrequent. Content vendors are required to take counter-measures for this issue.Response We provide safe and trusted products and services. For certain titles, we have applied age authentication to set upper limits on monthly fees, and we have established and implemented in-house guidelines to avoid the use of vague terms that can give players overly high expectations and to prevent the charging of excessive fees. We also create experiences that move the heart for people worldwide by providing various types of gameplay for diverse users.Games create continued contact points between the provider and consumers. There-fore, the provision of ongoing support is neces-sary. Any shortcomings in such support could harm brands.Response Normally, we respond to cus-tomer inquiries through a player support help-desk. If needed, however, we establish dedicated helpdesks.The World Health Organization (WHO) has recog-nized gaming disorder as a mental disease.Response Research has begun by external experts with a fair, neutral, professional back-ground, led by game organizations such as CESA, JOGA, MCF, and JeSU. With the support of the four groups, a bench-marketing study has been launched to look at appropriate measurement criteria and the characteristics of game addiction to sup-port further research, such as understanding the scale of problem gaming, its causes and protective factors.41Planning and developmentManufacturing4SalesOperations In-house OutsourcingRegulator revisions and etc.SBefore they can be sold, pachislot and pachinko machines must receive approval through prototype testing, which determines whether machines are compliant with the Entertainment Establishments Control Law and other statutory laws and regulations. Therefore, regulatory revision can significantly affect the marketability and unit sales of pachis-lot and pachinko machines.Response We are taking steps to increase efficiency with the aim of accelerating develop-ment so that we can swiftly respond to regula-tory revision. In addition, we have to address the risk of a potential drop in the ratio of products receiving approval through prototype testing while also developing models with diverse gameplay that a wide range of customers can enjoy casually. Our goal is to improve the quality of our products, in parallel with efforts to rapidly address changes to regulations. Environmental burden of raw materials and the processing of recovered and surplus componentsEAddiction and improper modifications or playing techniques that undermine the industry’s imageSSammy’s manufacturing processes could give rise to surplus electrical components and other components. We use natural resources, such as wood, and materials that could place a burden on the environment, such as adhesives. Also, processing pachislot and pachinko machines at the end of their service lives is an important responsibility.Response We are committed to the “3Rs” (reduce, reuse and recycle) throughout all our business processes. At the design and devel-opment stages, we are working to standardize parts and share parts between pachislot and pachinko machines, and we reuse machines removed from pachinko halls. We are promot-ing the use of water-based adhesives with less environmental impact. Our reuse initiatives are aimed at mitigating environmental impact, but a parallel objective is to improve the profitability of our businesses by increasing efficiency through the use of common parts to reduce procurement costs.There are concerns that growing public criti-cism about pachislot and pachinko addiction and the use of improperly modified pachislot and pachinko machines in commercial opera-tions or improper playing techniques could harm the image of this industry, ultimately leading to a contraction in the pachislot and pachinko machine market.Response To support the sustainable development of this industry, we are actively working with industry bodies to control addictive behavior. We also provide backing for Recovery Support Networks and are developing machines with more casual gameplay. In terms of efforts to prevent improper modifications, we coordinate with industry associations in a voluntary drive to collect pachislot and pachinko machines that have been improperly modified. In addition, we have established an internal office tasked with preventing illegal acts, which gathers market information and contributes to the manufacture of pachislot and pachinko machines that are highly resistant to improper modification. We also take measures to urge caution in relation to strategy guides that are unfounded.Resort Business25Integrated Resort (IR)PlanningDevelopmentManagement of IR facilities with casinos (Overseas)Management of resort complexes without casinos (Japan)Compliance violationsGMeasures against addictionSAny litigation filed against us or any penalties incurred from regulatory author-ities for violations of laws or ordinances may undermine our brand image and possibly affect our participation in domestic IR operations.Response Under the Group Compliance Liaison Committee, we are working to build a corporate structure that fosters the development of sound corporate management in observance of laws, ordinances, and societal norms.Lack of responsiveness to social demands for measures against gambling addiction could invite public backlash and jeopardize business continuity.Response Through industry-academia joint research with Kyoto University we are working to develop systematic measures against gam-bling addiction. By analyzing behavioral data from players showing signs of gambling addiction, we aim to establish a system that rapidly detects addiction and prevents behavior from escalating.5253SEGA SAMMY HOLDINGSINTEGRATED REPORT 2021A History of Experiences That Move the HeartThe SEGA SAMMY Group will continue to pursue the creation of experiences that move the heart well into the future.The SEGA SAMMY Group was formed in October 2004 through the management integration of SEGA, a creator of well-known innovative products, and Sammy, a developer of various industry-first products. Since the management integration, SEGA SAMMY Group companies have continued to offer experiences that move the heart for consumers and create new experiences through the full-scale entry into the Resort Business in 2012 and other initiatives.2013201520192021 Launched Pachislot Hokuto No Ken Chapter of Resurrection Launched Pachislot Bakemonogatari Launched new series Pachinko CR Shin Hokuto Muso, drawing on a game IP Launched Pachislot Hokuto No Ken Tenshou, the first title in the Hokuto No Ken series for No. 6 models Launched Pachislot Hokuto No Ken Shukumei for No. 6.1 models1989200120032008200920122017 Launched ALADDIN, the industry’s first single-bonus hitter pachislot machine Launched Beast King, a pachislot machine with assist time (AT) Launched Pachislot Hokuto No Ken, which set an unprece-dented sales record unbeaten to this day Launched Pachinko CR Hokuto No Ken, the Company’s best-selling pachinko machine by number of units Launched Pachislot Psalms of Planets Eureka Seven, which introduced new gameplay characteristics into No. 5 models Made PHOENIX RESORT CO., LTD., a wholly owned subsidiary Established a joint venture with the PARADISE GROUP of South Korea Acquired gaming machine manufac-ture and sales license in the U.S. State of Nevada Opened PARADISE CITY, South Korea’s first integrated resort2021 Launched PHANTASY STAR ONLINE 2 NEW GENESISPachislot Bakemonogatari©Nisioisin/Kodansha, Aniplex Inc., SHAFT INC. ©SammyPachislot Hokuto No Ken Chapter of Resurrection©Buronson & Tetsuo Hara／NSP1983,©NSP2007 Approved No.YGL-126©SammyPachinko CR Shin Hokuto Muso©Buronson & Tetsuo Hara／ NSP 1983 Approved No.KOJ-111 ©2010-2013 Koei Tecmo Games Co., Ltd.©SammyPachislot Hokuto No Ken Tenshou©Buronson & Tetsuo Hara／NSP 1983,©NSP 2007 Approved No.YAF-420©SammyPachislot Hokuto No Ken Shukumei©Buronson & Tetsuo Hara/COAMIX 1983, ©COAMIX 2007 Approved No.YRG-121©SammyALADDIN©Sammy Beast King©Sammy Pachislot Hokuto No Ken©Buronson & Tetsuo Hara／NSP 1983©SammyPachinko CR Hokuto No Ken©Buronson & Tetsuo Hara／NSP 1983,©NSP2007 Approved No. SAE-307©SammyPachislot Psalms of Planets Eureka Seven©2005 BONES/Project EUREKA©SAMMY©BNEI Phoenix Seagaia Resort©Phoenix ResortPARADISE CITY©PARADISE SEGASAMMY Co., Ltd. All rights reserved.19881993199820052012201320162020 Launched the Mega Drive home video game console powered by a high-performance 16-bit CPU Started rolling out Virtua Fighter, a 3D computer graphics (CG) fighting game Launched Dreamcast, the industry’s first home video console with internet connec-tivity Launched Ryu ga Gotoku, the first title in a blockbuster series of home video console games Launched the first title in the Sangokushi Taisen series of network-enabled trading card games Started distribution of online RPG PHANTASY STAR ONLINE 2 Started distribution of smartphone game Puyo Puyo!! Quest and CHAIN CHRONICLE Launched home video console game Persona 5 Launched PC game Total War: WARHAMMER 2 Released the Sonic the Hedgehog movie Launched HATSUNE MIKU: COLORFUL STAGE!PHANTASY STAR ONLINE 2 NEW GENESIS ©SEGAMega Drive©SEGA Dreamcast©SEGA Virtua Fighter©SEGA PHANTASY STAR ONLINE 2©SEGAPersona 5©ATLUS. ©SEGA. All rights reserved. CHAIN CHRONICLE©SEGA Ryu ga Gotoku©SEGA Sangokushi Taisen©SEGA Puyo Puyo!! Quest©SEGA Total War: WARHAMMER 2© Games Workshop Limited 2020. Published by SEGA.HATSUNE MIKU: COLORFUL STAGE! © SEGA/© CP/© CFM 5455Established 1960Established 1975Management Integration 2004Sonic The Hedgehog©2020 PARAMOUNT PICTURES AND SEGA OF AMERICA, INC. ALL RIGHTS RESERVED.SEGA SAMMY HOLDINGSINTEGRATED REPORT 2021Non-Financial DataNumber of EmployeesNumber and Percentage of Female ManagersNew Employee Turnover RateCO2 Emissions (Scope 1)CO2 Emissions (Scope 2)Total Energy InputPeople People / % 8,7987,6397,7267,9937,5351018.01026.6866.4786.7815.0% 9.56.0t-CO28,6138,712t-CO2GJ86,944 85,140 84,49880,5661,832,9271,897,720 1,862,9111,810,5807,1995,7825,49918,969579,023’17’18’19’20’21(FY)’17’18’19’20’21(FY)’17’18’19’20’21(FY)’17’18’19’20’21(FY)’17’18’19’20’21(FY)’17’18’19’20’21(FY)Note: The number of employees increased in fiscal year 2020, mainly due to the transfer of temporary workers in the Entertain-ment Contents Business to permanent employment contracts. Number of female managers Percentage of female managers * The new employee turnover rate indicates figures for SEGA SAMMY HOLDINGS, SEGA, and SAMMY only.Employees Rehired after RetirementAverage Overtime Hours per MonthPeople Hours 60575524.321.919.719.417.3434319Electricity UsageMWh167,381173,879 172,918 171,020Industrial Waste DischargetWater Usagem31,5711,397886,828911,771855,791823,0991,2421,1881,112603,28747,4453.12.52.0Employees Taking Childcare Leave and Percentage of Employees Returning to Work after Childcare LeavePeople / % 10090.98210010010010098.697.896.891.710710410195’17’18’19’20’21(FY)’17’18’19’20’21(FY)’17’18’19’20’21(FY)’17’18’19’20’21(FY)’17’18’19’20’21(FY)’17’18’19’20’21(FY)Other IndicatorsMid-Career Hires (People)Hiring of Persons with Disabilities (People)Employees Taking Maternity Leave (People)Days of Paid Leave Taken (Days)Percentage of Paid Leave Taken* (%)Days of Volunteer Leave Taken (Days)Employees Taking Volunteer Leave (People) Number of employees taking childcare leave Percentage of male employees returning to work after childcare leave Percentage of female employees returning to work after childcare leave 201721297458.246.292572018226945511.563.7704620192241046612.569.5101422020193987014.075.61816(FY)2021971294611.048.100Notes 1: Some data estimated based on total floor area 2: Decline in CO2 emissions mainly reflects reductions in the use of fuel and electricity3: Coefficient for CO2 emissions from purchased electricity: Adjusted emission coefficients for each electricity provider for the fiscal year prior to each reporting fiscal yearNumber of violations of environmental laws and regulationsEnvironmental Indicators at Sammy’s Kawagoe FactoryPachinko and pachislot machine recycle rate(total for pachinko and pachislot machines)Use of environment-friendly raw materials in pachinko and pachislot machinesRecycle rate (%)Amount of wood used (t) Of which, PEFC-certified wood20190201995.037013.8%20200202095.42153.3%(FY)20210(FY)202198.629100%* Calculated by dividing the number of paid leave days taken by the number of statutory annual paid leave days.Includes statutory annual paid leave days at some Group companies.Scope of Data and Aggregation Methods Fiscal years 2018 and 2019: 15 domestic companies, fiscal year 2020: 13 domestic companies, fiscal year 2021: 12 domestic companies (SEGA SAMMY HOLDINGS, SEGA GROUP, SEGA, Sammy, SEGA TOYS, TMS ENTERTAINMENT, SEGA SAMMY CREATION, SEGA Logistics Service, Sammy Networks, PHOENIX RESORT, DARTSLIVE, Butterfly Number of employees indicates consolidated Group figures Hiring of Persons with Disabilities indicates the number of persons with disabilities hired by Group companies to which the Employment Rate System for Persons with Disabilities is applicable.Scope of Data 11 companies SEGA SAMMY HOLDINGS INC., SEGA CORPORATION (formerly SEGA GROUP CORPORATION, SEGA Games Co., Ltd., SEGA Interactive Co., Ltd.), Sammy Corporation, DARTSLIVE Co., Ltd., PHOENIX RESORT CO., LTD., Sammy Networks Co., Ltd., SEGA TOYS CO., LTD., TMS ENTERTAINMENT Co., LTD., SEGA Logistics Service Co., Ltd., Sega of America, Inc., Sega Europe Ltd.5657Human Resources DataEnvironmental DataSEGA SAMMY HOLDINGSINTEGRATED REPORT 2021Corporate GovernanceBasic Principles Regarding Corporate GovernanceThe SEGA SAMMY Group positions corporate governance as the most important foundation for facilitating good corporate behavior. The Group has the aim of “improving efficiency,” “securing soundness” and “enhancing transparency” of corporate management as its “basic policy for corporate governance”; based on which the Group has made determinations on important management issues, including appointment of director candidates, determination of directors’ compensation, oversight of management, and determination of auditors’ compensation.Corporate Governance SystemThe SEGA SAMMY Group has adopted an Audit and Supervisory Board member system to enable directors to make prompt, optimal deci-sions amid volatile business conditions, based on their wealth of expertise and experience regarding the industry, market trends, products, merchandise, and services. At the same time, we have appointed external directors and strengthened our executive officer system and internal auditing system, thereby reinforcing corporate governance with respect to operational management and oversight. In addition, starting from January 2010, the Company has selected two external Audit & Supervisory Board members as independent directors from the perspective of protecting the interests of ordinary shareholders, in order to further enhance management transparency.General Meeting of ShareholdersTo encourage active participation in the General Meeting of Shareholders and facilitate the exercise of voting rights, SEGA SAMMY HOLDINGS sends out early convocation notices (three weeks before the meeting) to provide shareholders with sufficient time to consider the Company’s proposals. The Company has also introduced an electronic voting system that allows shareholders to exercise their voting rights using the internet and other electronic methods.Breakdown of Shareholders Financial institutionsOther companiesAs of March 31, 202115.8％21.0%Foreign institutions and individuals Japanese individuals and other 31.5%17.9%11.7%Securities companies 2.1%Treasury stock Election /DismissalReports /ProposalsElection /DismissalReportsDetermination of Election / Dismissal Proposal of Accounting AuditorElection /DismissalSupervisionEvaluationIndependent AuditorExecution instructions by President, Representative DirectorInternal Auditing OfficeExecutive OfficersElection / DismissalInstructionsReportsReportsReports /ProposalsBoard of DirectorsAudit & Supervisory BoardReportsInternal directorsExternal directorsAt ordinary Board of Directors meetings held once a month in principle and at extraordinary Board of Directors meetings held as necessary, the Board of Directors aims to achieve flexible management through the current level of eight directors. Certain important managerial matters at each business company are also resolved and reported at the Company’s Board of Direc-tors or other bodies.AuditInternal audit & supervisory board memberExternal audit & supervisory board memberIn principle, the Audit & Supervisory Board holds meetings once a month, or when otherwise necessary. The Audit & Supervisory Board makes decisions with respect to assigning duties to the respective Audit & Supervisory Board members, and also deliberates on key matters for consideration, such as those involving the Group’s corporate governance, the status of establishing and operating internal control systems, and evaluations of independent auditors.Instruction for operationsSupport for operationsOfficer of Audit & Supervisory Board MembersAudit /Audit Reporting /Exchange of InformationAdvance Deliberations /Instructions for ExaminationReports /ProposalsAdvice /Exchange of InformationReports / Exchange of InformationVoluntary CommitteesLiaison CommitteesGroup Compliance Risk Liaison CommitteeThe Group Compliance Risk Liaison Committee discusses, verifies and shares details about measures and information regarding internal control, compliance, risk management, etc. In principle, the Committee holds meetings once every six months.Independent Advisory CommitteeThe Independent Advisory Committee is composed of all of the indepen-dent external directors and independent external Audit & Supervisory Board members. The Committee provides opinions from an indepen-dent perspective in response to referrals by the Board of Directors or the representative directors, in order to ensure conformity with the various related principles under the Corporate Governance Code. Furthermore, the Committee exchanges information in order to oversee the Board of Directors and holds meetings as and when appropriate.Group Management Strategies CommitteeThe Group Management Strategies Committee is established under the Company’s Board of Directors and discusses and verifies the improve-ment of profitability, efficiency, strategic investment cases, etc., of the Group’s business. The Committee is composed of directors (excluding the Chairman (Representative Director)) and standing Audit & Supervi-sory Board members, and holds meetings as and when appropriate.Group Audit Liaison CommitteeComposed of standing audit & supervisory board members of Group companies, the Committee meets three times a year in principle (two meetings in the fiscal year ended March 2021) in order to share information regarding timely issues (including the revision of laws) surround-ing the SEGA SAMMY Group and to achieve close cooperation among the audit & supervisory board members of Group companies.Holdings Audit Liaison CommitteeThe Holdings Audit Liaison Committee is composed of standing Audit & Supervisory Board members, directors of accounting depart-ments, internal auditing departments, and internal control departments, etc., of the Company, SEGA CORPORATION, Sammy Corpora-tion, and KPMG AZSA LLC, the accounting company for the Company. In principle, the Committee meets twice annually to exchange opinions from respective viewpoints in order to improve compliance in accounting.Audit & Supervisory Board Members and Internal Auditing Office Liaison CommitteeThe Audit & Supervisory Board members and Internal Auditing Office Liaison Committee is composed of standing audit & supervisory board members of Group companies, plus the internal auditing department of the Company. In principle, the Committee meets once every three months with the aim of “ensuring soundness” of corporate management through information sharing among standing audit & supervisory board members of Group companies and the internal auditing department of the Company.Reflection in Policies /Exchange of InformationReports /Proposals /Exchange of InformationNotification ChannelVarious Consultation ChannelsReflection in Policies / Exchange of Information Reports /Proposals /Exchange of InformationEach DivisionGroup CompaniesSpecific Execution InstructionsInternal Audit / Reports / Advice5859SEGA SAMMY HOLDINGSINTEGRATED REPORT 2021Corporate Governance Q&ABasic Principles Regarding Corporate GovernanceImproving EfficiencyBy establishing a rapid and appropriate decision-making process and improving the efficiency of corporate management, the Company aims to maximize its corporate value, thereby striving to provide appropriate returns to various stakeholders, including shareholders.Securing SoundnessAmid drastic changes in the business environ-ment, in order to maximize corporate value, the SEGA SAMMY Group will accurately identify and manage the various risks facing the Group, and will ensure sound manage-ment through the establishment of a system (compliance system) to ensure compliance not only with laws and regulations but also with ethical and social norms.Enhancing TransparencyGiven the increasing importance of informa-tion disclosure for companies, the SEGA SAMMY Group will fulfill its accountability to stakeholders, including shareholders, and will further improve disclosure by proactively engaging in IR activities, thereby aiming to develop highly transparent management of the Group.QAWhat policies and reasons support the selection of external directors and external Audit & Supervisory Board members?The Company selects external directors from among managers, etc., who are expected to (i) pro-vide advice on how to enhance the corporate value of the SEGA SAMMY Group from external perspec-tives, and (ii) provide oversight functions over the execution of duties by directors, based on their deep insight and extensive experience.The Company has eight directors, four of whom are external and independent directors, as well as three Audit & Supervisory Board members, two of whom are external Audit & Supervisory Board members and independent directors. At the various meetings that they attend, external directors and external Audit & Supervisory Board members provide guidance and advice based on their abundant experience and highly specialized knowledge. Selection PolicyThe Company selects external directors from among managers, etc., who are expected to (i) provide advice on how to enhance the corporate value of the SEGA SAMMY Group from external perspectives, and (ii) pro-vide oversight functions over the execution of duties by directors, based on their deep insight and extensive experience. The Company understands that external Audit & Supervisory Board members play an important role in realizing a corporate governance system which improves the neutrality and independence of the audit-ing system, and thus, selects external Audit & Supervi-sory Board members who have significant expertise and experience in a wide range of fields, and from whom it is expected that the soundness of the man-agement can be secured by conducting auditing from a neutral and objective standpoint.Principles Regarding IndependenceThe Company determines the independence of external directors and external Audit and Supervisory Board members based on criteria such as “significant business partners” and “large monetary amounts,” which are cited in the independence criteria stipu-lated by the Tokyo Stock Exchange (TSE), with refer-ence to the publicly announced standard model for appointing independent directors and based on said criteria. We deem that persons satisfying the require-ments of said criteria do not have conflicts of interest with ordinary shareholders.Reasons for Appointment of External DirectorsKohei KatsukawaCorporate manager (Financial institutions)To reflect Mr. Katsukawa’s wealth of experience and extensive expertise in the financial field in the Company’s business management.Melanie BrockCorporate manager (International business)To reflect Ms. Brock’s wealth of experience and extensive expertise as an interna-tional business leader, backed by her diverse views and values as a woman and non-Japanese director, in the Company’s business management.Naoko MurasakiCorporate manager (Risk consulting)To reflect Ms. Murasaki’s wealth of expertise in the field of global risk and gover-nance, which she gained over many years in the National Police Agency, the Ministry of Foreign Affairs and risk consulting firms, in the Company’s business managementFujiyo IshiguroCorporate manager (Digital field)To reflect Ms. Ishiguro’s wealth of knowledge in corporate management and the digital field as a founder of Netyear Group Corporation in the Company’s busi-ness management.Reasons for Appointment of External Audit & Supervisory Board MembersKazutaka OkuboTo reflect Mr. Okubo’s wealth of expertise and extensive experience in auditing work as a certified public accountant in the Company’s auditingShione KinoshitaTo reflect Ms. Kinoshita’s wealth of experience and extensive expertise as an attorney in the Company’s auditingQAQAQAWhat kind of training and support do you provide to directors and Audit & Supervisory Board members?We run training sessions and provide opportunities to participate in external seminars.At the time they assume office, directors and Audit & Supervisory Board members are provided with oppor-tunities to participate in internal orientation sessions and training sessions with the purpose of acquiring knowledge on the roles and responsibilities expected of directors and Audit & Supervisory Board members of a listed company, as well as knowledge regarding related laws and regulations and compliance. Then, What is your policy on strategic shareholdings?Strategic shareholdings are limited to cases that are deemed to provide benefits to all shareholders by increasing corporate value.In terms of methods for assessing the rationale for The Company holds shares for purposes other than pure investment only in cases where the Company considers that holding the shares will enable a busi-ness alliance, the expansion of transactions, etc., and will lead to an improvement in corporate value, thereby benefitting shareholders. shareholdings, the Company examines economic rationale, future outlook, etc., on a periodic basis at Board of Directors meetings to determine whether it is beneficial to continue holding shares. In addition, the Company comprehensively assesses the suitability of shareholdings based on quantitative evaluation to confirm current and future profitability and qualitative evaluation to ascertain progress against shareholding objectives.What internal control systems related to financial reporting are you creating and maintaining?We have put in place evaluation and reporting mech-anisms that ensure reliable financial reporting.The Group started the Group Internal Control project during the fiscal year ended March 2006, established a scheme for evaluating and reporting of the internal control system required for corporate groups under the system of “Evaluation and Auditing of Internal Control Relating to Financial Reporting” (the Japanese Version of the “SOX Act”) as stipulated in the Financial Instru-after assuming office, directors and Audit & Supervi-sory Board members are continuously provided with further opportunities to acquire and enhance neces-sary or new knowledge, including participating in train-ing sessions provided by external lecturers such as attorneys and experts in each area, for example, after the conclusion of a Board of Directors meeting. In addition, the Company encourages each direc-tor and Audit & Supervisory Board member to volun-tarily improve their skills by participating in external seminars and lectures sponsored by organizations to which the Company belongs, and provides support in paying the necessary expenses. Value of strategic shareholdings (excluding non-listed stocks)(Millions of yen)24,97519,34318,28413,6042017201820192020(FY)Number of companies22126120211ments and Exchange Act, and remedied inadequacies discovered in the course of conducting the evaluation. As a result, efforts for ensuring trust/reliability in finan-cial reporting have been conducted, thereby resulting in the Company’s judgment of having achieved effec-tive internal control relating to the financial reporting of the Group for the fiscal year ended March 2021. For the future as well, the Company will strive to ensure con-tinuing trust/reliability in financial reporting, as well as maintaining and developing the internal control system, taking into consideration issues such as improving efficiency and ensuring soundness.PDF For more details, please see the Corporate Governance Report on our corporate website.https://www.segasammy.co.jp/english/media/file/pr/corp/governance/governance.pdf6061SEGA SAMMY HOLDINGSINTEGRATED REPORT 2021QAWhat steps are you taking to assess the effec-tiveness of the Board of Directors?The Company aims to further improve the effective-ness of the Board of Directors by enhancing the Board’s capabilities.For the fiscal year ended March 2021, the Company At the Company, the Independent Advisory Commit-tee, composed of independent external directors and independent external Audit & Supervisory Board mem-bers, shall perform analysis and evaluation each year, regarding the matters considered as important in the effective fulfillment of the Company’s Board of Direc-tors’ roles and responsibilities (such as the size, com-position, operating manner, status of deliberations, and support system of the Board of Directors). provided questionnaires to all directors and Audit & Supervisory Board members and, based on the results thereof, the Independent Advisory Committee per-formed an analysis and evaluation and reported at the regular Board of Directors meeting held in May 2021, that, while the Company’s Board of Directors tends to place more importance on decision-making for individ-ual proposals, it has reinforced the management over-sight and supervisory functions by allocating three External Directors with diverse backgrounds, and that Board of Directors Meeting Attendance Main ActivitiesBoard of Directors convened 13 timesRegarding the operation of the Board of Directors, it was therefore confirmed that the effectiveness of the Company’s Board of Directors had been secured.Regarding the composition of the Board of Direc- tors, the Independent Advisory Committee recognized that members are appointed in a diverse and well-bal-anced manner, and that the ratio of External Directors is generally at an appropriate level. while the Independent Advisory Committee recog-nized that the Group Management Strategies Commit-tee, which includes external directors, effectively functions as a body to provide sufficient information and discuss in advance of institutional decisions, and that a mechanism for each director to make appropri-ate decisions in place, there were suggestions for efficient operation, such as those calling to increase opportunities for progress reports and post-reporting of important projects, as well as to devote more time to questions and discussions through rigorous time man-agement and to review the standards for submission of agenda matters including the delegation of authority to the CEO. the Board of Directors shall strive to further improve the functions of, and enhance the effectiveness of, the Board of Directors.Based on the foregoing evaluation of effectiveness, External directorsTakeshi Natsuno Kohei KatsukawaMelanie Brock(External directors’ attendance)97%External Audit & Supervisory Board membersMineo Enomoto Kazutaka Okubo(External Audit & Supervisory Board members’ attendance)92%* Above information accurate as of March 31, 2021Attended 13 of 13 meetingsMr. Natsuno principally provided expert opinions on business management and stated recommendations with a view to ensuring the appropriateness and fairness of the Board of Directors’ decision-making.Attended 12 of 13 meetingsMr. Katsukawa principally provided expert opinions on business management and stated recommendations with a view to ensuring the appropriateness and fairness of the Board of Directors’ decision-making.Attended 13 of 13 meetingsMs. Brock principally provided expert opinions on business management and stated recommendations with a view to ensuring the appropriateness and fairness of the Board of Directors’ decision-making.Attended 12 of 13 meetingsAttended 12 of 13 meetingsMr. Enomoto principally provided opinions based on his professional insight as an attorney, provided expert opinions on business management, and stated recommendations with a view to ensuring the appropriateness and fairness of the Board of Directors’ decision-making. Mr. Okubo principally provided specialist opinions about financial accounting and internal control systems and opinions on business management based on his professional insight as a certified public accountant, and stated recommenda-tions with a view to ensuring the appropriateness and fairness of the Board of Directors’ decision-making.QAPlease tell us about the Company’s dialogue with shareholders and other investors.The Company actively discloses information to help all investors make informed investment decisions.In order to facilitate constructive dialogue with share-holders and investors, the Company has a basic posi-tion of appointing an executive officer in charge of Investor Relations (IR) & Shareholder Relations (SR), establishing a department in charge of IR & SR, and addressing the following issues. In facilitating constructive dialogue with shareholders and investors, the Company implements measures to ensure close and positive cooperation between and among internal departments, such as the corpo-rate planning, finance and accounting, legal affairs, and general affairs departments. In line with the quarterly disclosure of operating results, the Company holds online briefing sessions mainly targeting institutional investors. The President (Representative Director) of the Company and the Chief Financial Officer or others, attend briefing sessions on the settlement of accounts and actively engages in direct interactions. For shareholders and investors, IR & SR personnel and the executive officer in charge of IR & SR hold an individual meeting after the quarterly disclosure of operating results. In addition, in line with the direction of the Company, small conferences, etc., may also be held as appropriate. For overseas shareholders and investors, the Repre-sentative Director of the Company, the Chief Financial Officer or others individually provides opportunities to have dialogues multiple times per year. Regarding the status of dialogue with shareholders and investors, the Company promptly provides feedback on a regular basis or as needed to the QAWhat are the material risks across its business the Company identifies and the steps it is taking to address those?The Group Compliance Risk Liaison Committee leads the Company’s efforts to address risks.The Group has established the Group Compliance Risk Liaison Committee to discuss, verify and share details about measures and information regarding internal control, compliance, risk management, etc. Risk item SummaryMain measuresCompliance and legal violations Risks related to obstructions in acquiring integrated resort operating licenses due to compliance and legal violations, and license cancellation by the Nevada State Gaming Commission Violation of rights of third parties by way of the products or services provided by the Group Malfunctions of products manufactured by the Group Risk of damage to brand image due to litigation arising from unexpected complaints from users, etc.Disasters Risks of greater-than-anticipated physical damage or casual-ties among personnel at the headquarters, operating bases, or manufacturing bases of Group companies or those of the Group’s business partners due to large-scale natural disasters – such as earthquakes, fires, or floods – or terrorist attacks.Information security External attacks such as hacking Malfunction and other failure of information system due to computer virus, etc.Outbreaks of infectious diseases Suspension of business functions due to outbreaks within the Company Representative Director, Chief Financial Officer and other directors and executive officers, and strives to utilize that information for the sustainable growth and medium-to-long-term corporate value enhancement of the Company. In accordance with the basic view that shareholders should be equally treated, when engaging in dialogue with shareholders with respect to the handling of unpublished important matters, regardless of whether it is a briefing session on the settlement of accounts or any other type of meeting, the Company endeavors to manage information in accordance with related laws, including the Financial Instruments and Exchange Act and the “Insider Trading Preven-tion Regulations” which are internal regulations aimed at preventing insider trading.The Committee carries out cross-mapping by investi-gating the level of impact and the possibility of occur-rence for latent risks in the Group. The Committee then performs risk evaluation and reports its results, which includes examining appropriate countermeasures for those risks, to the Board of Directors, where those risks are discussed. The risks that have been determined by the Group Compliance Risk Liaison Committee as being particularly significant are described below. Implement Group compliance measures through the estab-lishment of a dedicated office Spread knowledge of the “Corporate Ethics Hotline” Signed up to “Whistleblowing System Certification (System for self-declaration of conformity)” Activities to prevent involvement with anti-social forces(1) As Groupwide measures against anti-social forces, each Group company has implemented rules and conducts background checks when entering into transactions(2) Implement background checks when necessary for other existing transactions Establish crisis management rules, identify inherent risks in business activities, take steps to mitigate risks and prevent crises as a matter of normal practice, as well as establish and maintain systems to respond immediately to major crises Implement strengthening activities, educational activities and monitoring activities for security governance at each Group company Implement precautionary measures (surveillance and moni-toring) and follow-up measures (incident reporting), and implement vulnerability diagnosis, etc. Strengthen security surveillance tools In response to the COVID-19 pandemic, the Company has formulated and implemented Group policies in accordance with national and local government policies and rigorously implemented measures to prevent the spread of infection. Promote teleworking 6263SEGA SAMMY HOLDINGSINTEGRATED REPORT 2021QAWhat amounts of compensation does the Com-pany pay directors and Audit & Supervisory Board members and how is compensation calculated?The Company’s compensation system for directors and Audit & Supervisory Board members is designed to ensure transparency and provide greater incentive to increase corporate value.The compensation system for directors (excluding external directors) is determined based on the follow-ing basic policy.1 The system must increase management’s focus on shareholder interests and sharing value with shareholders.Fixed compensationA compensation table shall be formulated specifying the compen-sation amounts for each component, namely, basic compensation and role-based compensation, and the Company shall provide the sum of these components as monthly fixed compensation.Directors’ bonusesDirectors’ bonuses are paid at the amount determined by multiply-ing the above fixed compensation by coefficients calculated based on a bonus table that defines the number of months for directors’ bonuses in accordance with the three elements of the level of the amount of ordinary income, the business plan achievement level, and the year-on-year growth level.2 The system must clarify the responsibilities of management in improving the corporate value of the Group.3 The system must function as an incentive to sup-port the sustained growth of the Group.4 The system must have compensation levels for ensuring and maintaining excellent human resources appropriate for executing the roles and responsibilities of directors of the Company.In addition, based on the basic policy, the compen- sation system for directors of the Company (excluding external directors) includes director’s bonuses as fixed compensation and stock compensation with restric-tion of transfer as performance-based compensation.Stock compensation with restriction of transferThe Company has introduced a stock compensation plan with restriction of transfer (continuous service-based and perfor-mance-based stock compensation) for directors (excluding exter-nal directors) to incentivize efforts to continuously increase corporate value and to further enhance the sharing of value with all shareholders. Specific payments and allocations are determined using a ratio of approximately 1:1:1 for fixed compensation for a single fiscal year, performance-based bonuses for a single fiscal year, and stock compensation with restriction on transfer at the time the medium-term management plan is achieved. In the current medium-term management plan, the ratio of continuous service based shares with restriction on transfer and performance-based shares with restriction on transfer is expected to be approximately 1:3.Directors PDF For more details about the Company’s compensation system for directors and Audit & Supervisory Board members, please refer to the Annual