オリックス（8591） – Corporate Governance Report

This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Corporate Governance Report Final revision date: January 25, 2022 ORIX Corporation Representative Executive Officer: Makoto Inoue Contact: IR and Sustainability Department +81-3-3435-3121 Securities Code: 8591 https://www.orix.co.jp/grp/en/ I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Information 1. Basic Views • ORIX believes that a robust corporate governance system is essential for ensuring objective management and carrying out appropriate business activities in line with its core policies. We have therefore established a sound and transparent corporate governance system. • Details concerning corporate governance can be found below under II-2. Matters Relating to Business Execution, Audits and Supervision, Nomination, Compensation Determination, and Other Functions (Overview of Current Corporate Governance Structure), on the ORIX website and in securities reports. [Reasons for Non-Compliance with the Principles of the Corporate Governance Code] Information is based on the Corporate Governance Code after its revision in June 2021 (including content for the Prime Market division of the Tokyo Stock Exchange). The Company complies with all principles of the Corporate Governance Code. [Disclosure Based on the Principles of the Corporate Governance Code] The details of disclosure items pursuant to each principle of the Corporate Governance Code are as follows. [Principle 1-4 Cross-Shareholdings] • ORIX does not engage in cross-shareholdings of publicly-traded shares. [Principle 1-7 Related Party Transactions] • ORIX has established internal rules that in principle prohibit transactions by directors and executive officers with the company and its subsidiaries and takes measures to inform personnel about these rules and enforce them. Internal rules also provide that in cases where ORIX engages in certain transactions with a company at which an ORIX director or executive officer also serves as a director or executive with representative authority, a prior report must be made to the relevant division and prior approval must be obtained from the Board of Directors, and ORIX takes measures to inform personnel about these rules and enforce them. When transactions are conducted with the approval of the Board of Directors, the details are reported to the Board and systems are in place to monitor and ensure that those transactions will not give rise to concerns regarding harm to the interests of the company or its shareholders. This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. [Principle 2-3 Sustainability Issues, Including Social and Environmental Matters] • Cognizant that due consideration for sustainability issues is essential to meet societal expectations and achieve long-term growth as an enterprise that creates new value, ORIX appropriately addresses sustainability issues including social and environmental problems. • ORIX established the ORIX Group Sustainability Policy (“Sustainability Policy”) as an action policy concerning sustainability and takes actions to address sustainability in business based on this policy. [ORIX Group Sustainability Policy] https://www.orix.co.jp/grp/en/sustainability/about/index.html [Sustainability Report] https://www.orix.co.jp/grp/en/sustainability/sustainability_report/index.html [Principle 2-4-1 Ensuring Diversity in Appointing Core Personnel] Our approach to ensuring diversity and our policies regarding human resource development and work environment reform At ORIX, we have established the following as one of our ESG-related material issues: Continue to improve employee satisfaction by respecting the diversity of our employees and creating an inclusive working environment that promotes flexible working styles and provides career development support, fair performance review and compensation schemes, and employee health support systems. People are ORIX’s most important resource. Bringing onboard diverse human resources regardless of nationality, age, gender, or work history nurtures a Fusion of Intelligence built on diverse values and expertise. Based on its personnel strategy “Keep Mixed”, ORIX aims to create new value and a workplace that maximizes the abilities and expertise of each employee. We continuously reform our human resource system ahead of social trends and create fulfilling workplaces by establishing a work environment that respects diverse working styles. Moreover, we offer opportunities for employees who embrace challenges and are augmenting training and hiring of talent capable of performing on a global scale. For information disclosure regarding our internal work environment reform policies, please refer to our website and our Integrated Report 2021. [ORIX Website: Human Resources Strategy to Support Sustainable Growth] https://www.orix.co.jp/grp/en/sustainability/employee/ [Integrated Report] [Sustainability Report] https://www.orix.co.jp/grp/en/ir/library/annual_report/index.html https://www.orix.co.jp/grp/en/sustainability/sustainability_report/index.html Proactive, Measurable Goals for Ensuring Diversity As of March 31, 2021, our women employees, mid-career recruits, and overseas employees are as follows: ORIX Corporation ORIX Group* This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Ratio of women employees 43.3% Ratio of women employees in 26.2% managerial positions Ratio of mid-career recruits 40.1% Ratio of mid-career recruits in 39.7% managerial positions Ratio of non-Japanese 2.0% employees positions Ratio of non-Japanese 0.8% employees in managerial 45.8% 23.5% 58.7% 54.1% 0.9% 0.5% *Total figure for 10 major ORIX Group companies in Japan (10 major ORIX Group companies refers to: ORIX Corporation, ORIX Rentec, ORIX Auto, ORIX Credit, ORIX Real Estate, ORIX Computer Systems, ORIX Bank, ORIX Life Insurance, ORIX Eco Services and ORIX Asset Management & Loan Services. The total number of employees at these 10 companies as of March 31, 2021 was 10,363.) As one benchmark to involve diverse personnel in decision-making and offer equal leadership opportunities, and as one of ORIX Group’s concrete efforts to drive ESG-related material issue initiatives, one of our ESG-related key goals is for women employees to account for over 30% of management positions at ORIX Group by the end of the fiscal year ending March 31, 2030. Additionally, ORIX Group is strengthening its efforts to hire and promote mid-career recruits and non-Japanese employees based on its “Keep Mixed” human resource strategy. We aim to achieve true diversity, equity, and inclusion by creating a work environment that enables all employees to maximize their abilities and expertise based on the premise that employees come from a wide range of diverse [Principle 2-6 Roles of Corporate Pension Funds as Asset Owners] Status of Measures concerning ORIX Group Corporate Pension Funds • ORIX established an Asset Management Committee chaired by the ORIX Group CFO and with the officers responsible for finance, accounting, and personnel as members. • Matters concerning asset management policies and policy-based asset composition allocations are investigated by the Asset Management Committee and determined by the Representative Counsel. The financial status of the pension fund is extremely good and excessive risks have not been taken in asset management. Management policies emphasize curtailing decreases in value. In principle, the policy-based asset composition allocation is determined at the time of financial recalculation, which is performed every five years, and is verified annually and reviewed as necessary. • All service providers to whom management of the fund has been outsourced have accepted the Japanese version of the Stewardship Code. The fund holds quarterly management reporting backgrounds. This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. conferences concerning service providers and conducts quantitative analysis. In addition, with respect to qualitative analysis, service providers are required to submit annual written survey responses, and thereby appropriate management is confirmed. • Exercise of voting rights concerning ORIX Group shares and investment targets is performed in accordance with the decision-making criteria of management service providers, and there are no matters involving conflicts of interest. • Personnel with appropriate qualifications are assigned to the administrative offices of the fund, and the qualifications of those personnel are enhanced by sending them to outside seminars and other ORIX implements full disclosure of information through means such as the Company’s websites and the means. [Principle 3-1 Full Disclosure] following reports. [ORIX Website] https://www.orix.co.jp/grp/en/ [Securities Reports] [Integrated Report] [Sustainability Report] released in securities reports. Approach, etc. above. https://www.orix.co.jp/grp/en/ir/library/financial_result/index.html https://www.orix.co.jp/grp/en/ir/library/annual_report/index.html https://www.orix.co.jp/grp/en/sustainability/sustainability_report/index.html 1) ORIX has established and publicly released its core policies and target business indicators. The details are 2) For information on ORIX’s fundamental approach to corporate governance, please refer to I-1. Fundamental Details can be found below under II-2. Matters Relating to Business Execution, Audits and Supervision, Nomination, Compensation Determination, and Other Functions (Overview of Current Corporate Governance Structure), on the ORIX Website (corporate governance) and in securities reports (4.4. Corporate Governance, etc.). 3) The Compensation Committee formulates policies on the determination of director and executive officer compensation and the details of the compensation of each individual based on those policies. For information concerning the policies on the determination of director and executive officer compensation by the Compensation Committee, see (2) Policy for Determining Compensation of Directors and Executive Officers under II-1. Director and Executive Officer Compensation: Disclosure of Policies on Determination of Compensation Amounts and Methods of Calculation. 4) The Nominating Committee determines proposed resolutions relating to the appointment and dismissal of directors to be submitted to the annual general meeting of shareholders. For information on policies and procedures relating to the determination of director candidates and screening of executive officers, see 3. Matters Relating to the Three Committees, 1) Nominating Committee under II-2. Matters Relating to Business This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Execution, Audits and Supervision, Nomination, Compensation Determination, and Other Functions. 5) For information on the reasons why director candidates were nominated, see the reference information (matters to be resolved) in the Notice of the 58th Annual General Meeting of Shareholders. (See: https://www.orix.co.jp/grp/en/ir/library/shareholder_meeting/) For information on the reasons why outside directors were nominated, see II-1. Directors: Relationship with the Company (2). Also, regarding the nomination of executive officers, decisions are made in light of the policies described above in (4), taking into consideration the individual business experience and knowledge of each candidate. Profiles of each executive officer can be found on the ORIX website. (See https://www.orix.co.jp/grp/en/about/overview/officer/index.html) [Principle 3-1-3 Sustainability-related Initiatives] In November 2021, the Board of Directors deliberated on matters to be addressed by the Group regarding sustainability, formulated basic policies for sustainability, and approved ORIX’s Group-wide ESG-related material issues and key goals. We have also established a new executive body, the Sustainability Committee, to accelerate the promotion and implementation of sustainability at ORIX. For information regarding sustainability initiatives at ORIX Group in addition to strategies such as scenario analyses regarding TCFD recommendations, please refer to the ORIX sustainability website and Sustainability Report 2021. [Sustainability Report] https://www.orix.co.jp/grp/en/sustainability/sustainability_report/index.html [Sustainability Website] https://www.orix.co.jp/grp/en/sustainability/ Please refer to our Integrated Report 2021 and Sustainability Report 2021 for information regarding our investment in human capital and intellectual capital. [Integrated Report] [Sustainability Report] https://www.orix.co.jp/grp/en/ir/library/annual_report/index.html https://www.orix.co.jp/grp/en/sustainability/sustainability_report/index.html [Principle 4-1-1 Roles and Responsibility of the Board (1)] • For information on the scope of responsibility delegated by the Board of Directors to the management team, see (2) Matters Relating to the Board of Directors under II-2. Matters Relating to Business Execution, Audits and Supervision, Nomination, Compensation Determination, and Other Functions. [Principle 4-8 Effective Use of Independent Directors] This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. • For information on action policies relating to the effective use of independent directors, refer to (2) Action Policies Relating to the Effective Use of Independent Directors under II-1. Independent Directors: Other Matters Relating to Independent Officers. [Principle 4-9 Independence Standards and Qualifications of Independent Directors] • For information on ORIX’s Conditions for Director Independence, see (1) Status of Independent Directors under II-1. Independent Directors: Other Matters Relating to Independent Officers. [Principle 4-11-1 Preconditions for Board and Kansayaku Board Effectiveness] • For information on ORIXs approach concerning the structure of the Board of Directors, see (2) Matters Relating to the Board of Directors under II-2. Matters Relating to Business Execution, Audits and Supervision, Nomination, Compensation Determination, and Other Functions. [Principle 4-11-2 Preconditions for Board and Kansayaku Board Effectiveness] • For information concerning the status of concurrent positions held by directors, see the directors’ professional experience posted on the ORIX website. (See: https://www.orix.co.jp/grp/en/about/overview/officer/index.html) Also, for information concerning the key concurrent positions held by outside directors, see II-1. Directors: Relationship with the Company (2). [Principle 4-11-3 Preconditions for Board and Kansayaku Board Effectiveness] • The Board of Directors annually evaluates and analyzes its effectiveness and then makes efforts to improve its operations based on the results of questionnaires and interviews the Board of Directors Secretariat conducts • An overview of the effectiveness of the Board of Directors for FY2021.3 follows. toward the Directors. • The Secretariat of the Board of Directors provided a questionnaire (details below) to the Directors. Then, based on the results of the questionnaire, the Secretariat of the Board of Directors individually interviewed each Director to gather additional information including opinions not available from the questionnaire alone and requests concerning the operations of the Board of Directors. • The Secretariat of the Board of Directors reported the results of the questionnaire and interviews to the Board of Directors. The Board of Directors formulated action plans for the issues raised by the report. • June 2021: Questionnaire implemented and interviews conducted based on the results of the questionnaire • August 2021: Questionnaire and interview results of the evaluation presented to the Board of Directors, action plan formulated < Questionnaire Contents> This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. • Composition of the Board of Directors • Operation of the Board of Directors • Agenda of the Board of Directors and other bodies • Effectiveness of the Board of Directors discussions • Board of Directors support system < Evaluation Results> • The results confirmed the effectiveness of the Board of Directors in terms of its composition, operation, agenda, effectiveness of discussion, and support system. At the same time, through questionnaires and interviews, we received much feedback on how to revitalize the Board of Directors, such as setting up more opportunities for free discussions in order to deepen the discussion surrounding mid- to long-term strategies and future direction. Based on the evaluation results above, the Board of Directors has formulated the following policy for improving effectiveness. • Set critical themes to be continuously discussed at Board of Directors meetings and engage in active discussions • Increase opportunities to explain overviews and strategies of various divisions to outside directors to further to deepen the debate on basic management policies. deepen their understanding of the business. [Principle 4-14-2 Director and Kansayaku Training] • When appointed to director and executive officer positions, personnel receive proper explanations from attorneys and others regarding their legal duties and responsibilities and other matters to be complied with as corporate officers, and external training organizations are used as necessary. When outside directors are invited to join the board, orientation is conducted including opportunities to receive individual explanations by the CFO or officer responsible for the Board of Directors secretariat concerning ORIX’s management strategies, business activities, finances, and other matters. In addition, periodic compliance training is conducted for officers while they are in office. [Principle 5-1 Policy for Constructive Dialogue with Shareholders] • For information on the development of systems and measures for promotion of constructive dialogue with shareholders, see III-2. Status of IR Activities. Foreign Shareholding Ratio Over 30% 2. Capital Structure [Status of Major Shareholders] Name Number of shares owned Percentage (%) The Master Trust Bank of Japan, 106,463,000 8.73 Ltd. (Trust Account) (shares) This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Custody Bank of Japan, Ltd. 75,528,200 Custody Bank of Japan, Ltd. 27,824,400 (Trust Account) (Trust Account 9) (Trust Account 7) Custody Bank of Japan, Ltd. 27,533,500 SSBTC CLIENT OMNIBUS 25,626,689 6.19 2.28 2.25 2.10 CITIBANK, N.A.-NY, AS 23,308,640 1.91 SMBC Nikko Securities Inc. 21,428,100 STATE STREET BANK WEST 20,699,800 1.75 1.69 NORTHERN TRUST CO. 18,965,811 1.55 ACCOUNT (permanent agent: Tokyo Branch, The Hongkong and Shanghai Banking Corporation Limited) DEPOSITARY BANK FOR DEPOSITARY SHARE HOLDERS (permanent agent: Tokyo Branch, Citibank N.A.) CLIENT-TREATY 505234 (permanent agent: Mizuho Bank, Ltd.) (AVFC) SUB A/C NON TREATY (permanent agent: Tokyo Branch, The Hongkong and Shanghai Banking Corporation Limited) (Trust Account 5) Controlling Shareholder Name Parent Company Name Custody Bank of Japan, Ltd. 18,354,000 1.50 ― ― ― Additional Information 3. Company Information Market Classification Fiscal Year First Section of the Tokyo Stock Exchange March This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Industry Other Financing Business Total Consolidated Number of Employees (as of Over 1,000 last fiscal year end) Total Consolidated Revenue (as of last fiscal year Over 1 trillion yen Total Consolidated Number of Subsidiaries Over 300 companies end) ― 4. Guidelines for Measures to Protect Minority Shareholders in Dealing with Controlling Shareholders 5. Other Special Conditions That Could Potentially Affect ORIX’s Corporate Governance 1) Our views and policies regarding Group management Of ORIX’s consolidated subsidiaries, only one is publicly traded: Ubiteq Inc. (JASDAQ Standard). While Ubiteq’s independence as a consolidated subsidiary is respected and Ubiteq is expected to use creative ideas to expand business activities, it has also established a compliance manual and compliance policies that firmly abide by applicable laws and regulations based on ORIX’s various Group governance policies. This will lead to strengthening compliance awareness and enhancing the internal structures and systems of this listed subsidiary company. Additionally, inter-group transactions and exchanges are closely monitored to ensure they are conducted lawfully and appropriately. 2) The significance of having a publicly listed subsidiary Conducting business activities as an ORIX Group company allows our publicly listed subsidiary to make effective use of our sales platforms to enhance their strengths including services utilizing IoT and AI technology – these services can support clients in their pursuits of optimizing the utilization of management resources and improving profitability. Additionally, access to communication with Group subsidiary ORIX Auto Corporation (‘ORIX Auto’) leads to synergy and elevation not only in ORIX Auto’s business and services, but to Ubiteq’s IoT and AI technology as well. The differences in the Company and Ubiteq’s business areas enable Ubiteq to maintain independence and be autonomous in its company management, and to abundantly acquire high performing human resources as a vital management resource. Moreover, we consider it crucial that Ubiteq maintain its publicly listed position as this will add to employee motivation and therefore increase corporate value, while augmenting the Group’s competitive advantage. 3) Policy to secure effective governance structures in publicly listed subsidiary In building and operating a Group-wide internal control system, ORIX has constructed a system in which we require publicly listed subsidiary companies to report in advance on risks we consider significant across the Group. We also require publicly listed subsidiaries to report in advance on matters related to disclosures, limiting this requirement to matters that have the potential to affect our timely disclosures to meet our disclosure requirements, and matters that have the potential to affect the Group’s consolidated financial statements. 4 of the 7 members of Ubiteq’s Board of Directors are employees of its parent This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. company, ORIX Corporation, and the objective of this ratio is to maximize synergy. In addition, by positioning 2 independent directors, and positioning 2 independent auditors on the Kansayaku Board (3 total members), we have a system that secures supervision, auditing, and proposals from an external perspective, which subsequently secures validity and adequacy of the Board of Directors’ decisions and business executions. Based on the above initiatives, the subsidiary’s Board of Directors—the function responsible in making final decisions—operates validly and adequately, and investor equality, which is essential and fundamental to governance, is secured. II. Status of Business Management Organization and Other Corporate Governance Systems Related to Management Decision-Making, Execution and Supervision 1. Institutional Composition Organizational Structure Company with Nominating Committee [Information Relating to Directors] Number of Director Posts According to the Articles of No upper limit on the number of persons Incorporation Incorporation Directors’ Term of Office According to the Articles of 1 year Chair of the Board of Directors Representative Executive Officer, President and Chief Executive Officer 11 persons By appointment 6 persons Number of Directors Status of Director Appointment Number of Outside Directors Independent Officers Relation to the Company (1) Number of Outside Directors Designated as 6 persons Name Information Relation to Company (*1) a b c d e f g h i j k Heizo Takenaka Academic Michael Cusumano Academic Sakie Akiyama Originally from another Hiroshi Watanabe Other Aiko Sekine* Certified Public company Accountant company Chikatomo Hodo Originally from another *Name on family register is Aiko Sano. This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. a. Executive for ORIX and/or its subsidiary b. Executive and/or a non-executive director of a parent company of ORIX c. Executive for a sister company of ORIX d. A party of which the major client or supplier is ORIX e. Major client or supplier of ORIX or an executive thereof f. Consultant, accountant, or legal professional who receives a large sum of monetary consideration or other property from ORIX other than officer compensation g. Major shareholder of ORIX (or an executive thereof if the shareholder is a legal entity) h. Executive of a client or supplier of ORIX (which does not correspond to d, e or f) (applicable to the executive himself/herself only) i. Executive of a company, between which ORIX mutually appoints outside directors (applicable to the executive himself/herself only) j. Executive of a company or organization that receives a donation from ORIX (applicable to the executive himself/herself only) k. Other Relation to the Company (2) Audit Committee Independent Officer Nominating Committee Committee Compensation Committee ○ Heizo Takenaka Name Additional Information Reason for Appointment ○ Mr. Takenaka satisfies the Mr. Heizo Takenaka served Conditions for Director successively as Minister of Independence determined by the State for Economic and Fiscal Nominating Committee (see Policy, Minister of State for Independent Officers below), Financial Services, Minister of and there is no likelihood of a State for Communications and conflict of interests with general Privatization of Postal shareholders, and therefore, he Services, and Minister for has been designated an Internal Affairs. He has a deep independent officer required by understanding of stock exchanges for protection of environment, events the of general shareholders, and stock corporate management and exchanges have been notified of economics, and financial this designation. policy both in Japan and overseas. As current chair of (Concurrent Positions) the Compensation Committee, – Chairman and Director, Mr. Takenaka has proactively PASONA Group Inc. taken the lead in deliberations – Director, Academyhills concerning compensation – Board of Directors (Outside systems and director Director), SBI Holdings, compensation levels as part of This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Inc. an initiative to strengthen ORIX’s mid- to long-term incentive function, and actively expressed his opinions and made proposals from a perspective specific to his wide-ranging experience and extensive knowledge regarding economics and financial policies. He has served as an ORIX outside director since June 2015. The Nominating Committee has determined that he can be expected to continue to fulfill a substantial role, including highly effective supervision of the Company’s management by utilizing a wealth of his knowledge and experience from an independent and objective standpoint. Michael ○ ○ Mr. Cusumano satisfies the Mr. Cusumano currently serves Cusumano Conditions for Director as Deputy Dean and Professor, Independence determined by the Faculty of Management at Nominating Committee (see Sloan School of Management Independent Officers below), at Massachusetts Institute of and there is no likelihood of a Technology, and as a global conflict of interests with general authority has a deep shareholders, and therefore, he understanding of business has been designated an strategy and technology independent officer required by management. Mr. Cusumano stock exchanges for protection of has actively expressed his general shareholders, and stock opinions and made proposals exchanges have been notified of during Board of Directors and this designation. Compensation Committee deliberations, pointing to (Concurrent Positions) important matters regarding – Deputy Dean, Professor, company management, using Faculty of Management, his expertise in business This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Sakie ○ ○ Ms. Akiyama satisfies the Ms. Sakie Akiyama founded Akiyama Conditions for Director Saki Corporation, served as Sloan School of strategy and technology Management at management. He has served as Massachusetts Institute of an ORIX outside director since Technology June 2019. The Nominating – Member of the Board of Committee has determined that Directors (Outside he can be expected to fulfill a Director), Ferratum Plc substantial role, including (currently Multitude SE) highly effective supervision of – Senior Specially Appointed the Company’s management by Professor and Dean of utilizing a wealth of his Entrepreneurship and knowledge and experience Innovation at the Tokyo from an independent and University of Science objective standpoint. Independence determined by the Representative Director and Nominating Committee (see Chief Executive Officer of Saki Independent Officers below), Corporation, and has wide ‐and there is no likelihood of a ranging experience and conflict of interests with general knowledge of corporate shareholders, and therefore, she management. As chair of the has been designated an Nominating Committee, Ms. independent officer required by Akiyama actively leads stock exchanges for protection of deliberations such as how the general shareholders, and stock Board of Directors and the exchanges have been notified of Nominating Committee should this designation. be constructed in order to suit our business expansion needs. (Concurrent Positions) She has served as an ORIX – Founder, Saki Corporation outside director since June – Member of the Board of 2019. The Nominating Directors (Outside Committee has determined that Director), Sony Corporation, she can be expected to fulfill a – Board of Directors (Outside substantial role, including Director), JAPAN POST highly effective supervision of HOLDINGS Co., Ltd. the Company’s management by – Board of Directors (Outside utilizing a wealth of her Director), Mitsubishi knowledge and experience Corporation from an independent and objective standpoint. This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Hiroshi ○ ○ ○ Mr. Watanabe satisfies the Mr. Watanabe has held multiple Watanabe Conditions for Director positions of responsibility Independence determined by the within the Ministry of Finance, Nominating Committee (see was previously Governor of the Independent Officers below), Japan Bank for International and there is no likelihood of a Cooperation, and currently conflict of interests with general serves as President for the shareholders, and therefore, he Institute for International has been designated an Monetary Affairs. Mr. independent officer required by Watanabe has extensive stock exchanges for protection of experience and a deep general shareholders, and stock understanding as an expert on exchanges have been notified of finance both in Japan and this designation. overseas, as well as wide- ranging experience and (Concurrent Positions) knowledge surrounding – President, Institute for corporate management. At International Monetary Board of Directors, Affairs Nominating Committee, and – Outside Director, Mitsubishi Audit Committee Materials Corporation deliberations, he draws on his expertise and actively expresses opinions and makes proposals regarding critical matters related to ORIX’s company management. He has served as an ORIX outside director since June 2020. The Nominating Committee has determined that he can be expected to fulfill a substantial role, including highly effective supervision of the Company’s management by utilizing a wealth of his knowledge and experience from an independent and objective standpoint. Aiko Sekine ○ ○ ○ Ms. Sekine satisfies the Ms. Aiko Sekine has financial Conditions for Director accounting experience in This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Independence determined by the deliberation committees in the Nominating Committee (see political and institutional Independent Officers below), sectors both in Japan and and there is no likelihood of a overseas and has a deep conflict of interests with general understanding as an expert in shareholders, and therefore, she accounting, having previously has been designated an been a partner at independent officer required by PricewaterhouseCoopers stock exchanges for protection of Aarata LLC and Chairman of general shareholders, and stock the Japanese Institute of exchanges have been notified of Certified Public Accountants. this designation. As chair of the Audit (Concurrent Positions) Committee, Ms. Sekine – Professor, Waseda periodically receives reports University, Faculty of from the Internal Audit Commerce department, and actively – Member of the Nominating expresses her opinions and Committee, International makes proposals during Federation of Accountants deliberations regarding the – Trustee, International effectiveness of internal Valuation Standards Council control systems. She has served – Advisor, Japanese Institute as an ORIX outside director of Certified Public since June 2019. The Accountants Nominating Committee has – Outside Audit & determined that she can be Supervisory Board Member, expected to fulfill a substantial Sumitomo Riko Company role, including highly effective Limited supervision of the Company’s – Outside Audit & management by utilizing a Supervisory Board Member, wealth of her knowledge and IHI Corporation experience from an independent and objective standpoint. Independence determined by the Accenture Japan Ltd., where he Nominating Committee (see previously served as Independent Officers below), Representative Director, and there is no likelihood of a making use of his vast conflict of interests with general experience and knowledge in Chikatom ○ ○ ○ Mr. Hodo satisfies the Mr. Hodo has served as Senior o Hodo Conditions for Director Corporate Advisor for This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. shareholders, and therefore, he corporate management and has been designated an digital business. In Board of independent officer required by Directors, Compensation stock exchanges for protection of Committee, and Audit general shareholders, and stock Committee deliberations, he exchanges have been notified of proactively provides opinions this designation. and recommendations on critical matters related to (Concurrent Positions) corporate management from – Outside Director, Konica his expert perspective on Minolta Inc. corporate management and – Outside Director, Mitsubishi digital business. He has served Chemical Holdings as an ORIX outside director Corporation since June 2021. The Nominating Committee has determined that he can be expected to fulfill a substantial role, including highly effective supervision of the Company’s management by utilizing a wealth of his knowledge and experience from an independent and objective standpoint. Nominating Committee Compensation Committee Audit Committee [Committees] Information Regarding Various Committee Structure and Chairs All Members Full-Time Internal Directors Outside Directors Chair Members 0 0 3 3 3 0 3 Outside Director 0 0 0 3 Outside Director 3 Outside Director [Information Regarding Executive Officers] Number of Executive Officers 20 persons Status Regarding Concurrent Positions This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Name Representative Concurrent Position as Director Rights Nominating Compensation Committee Committee Concurrent Position as Employee Makoto Inoue Shuji Irie Yes No Satoru Matsuzaki No Yoshiteru Suzuki No Stan Koyanagi No Yasuaki Mikami No Hidetake Takahashi Hitomaro Yano Toyonori Takahashi Yasuhiro Tsuboi Michio Minato Tetsuya Kotera Eiji Arita Seiichi Miyake Tomoko Kageura* Hiroyuki Ido Kiyoshi Habiro Ryujiro Tokuma Hao Li No No No No No No No No No No No No No Nobuki Watanabe No Yes Yes Yes Yes Yes No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No *Name on family register is Tomoko Kanda Directors or Employees Who Should Assist the Duties Yes [Audit System] of the Audit Committee Matters Concerning the Independence of the Directors and Employees from Executive Officers To support the work of the Audit Committee, ORIX established the Audit Committee Secretariat with a staff of four. The Audit Committee Secretariat supports the general operations of the Audit Committee and supports audits conducted by the Audit Committee in accordance with instructions from the committee. To ensure that the Audit Committee Secretariat staff members have the expertise necessary to support audits conducted by This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. the Audit Committee, all members concurrently serve as employees in the Group Internal Audit Department, and decisions concerning appointments, evaluations, transfers, and discipline of those staff members requires the approval of the Audit Committee. Collaboration Between the Audit Committee, Independent Auditors, and the Internal Audit Department The Audit Committee works together with independent auditors, the internal audit department, and the internal control-related functions (departments in charge of Group management) as follows. ORIX has entered into an audit agreement with KPMG AZSA LLC and undergoes financial audits and internal control audits by that firm. auditors. • The Audit Committee reviews and approves the annual audit plan prepared by the internal audit department. In addition, the Audit Committee confirms the audit plan of the independent • The Audit Committee receives reports on the results of internal audit department audits and the improvement status of the issues pointed out and confirms problems in business execution. • The Audit Committee receives and discusses the status of internal control evaluation related to financial reporting by the internal audit department and reports on the evaluation results. • The Audit Committee hears and examines the audit opinion and recommendations of the independent auditors for quarterly and year-end closing. • The Audit Committee receives and discusses important information on accounting audits and internal control audits conducted by the independent auditors. • The Audit Committee exchanges views with the independent auditors as necessary on important audit matters. • The internal audit department exchanges views with the independent auditors on risk recognition regarding financial reporting as necessary and works to strengthen collaboration in order to enhance the effectiveness and efficiency of the supervisory function. • The internal control-related functions regularly report on the operation status of the internal control system to the Audit Committee. [Information Regarding Independent Officers] Number of Independent Officers 6 persons 1) Status of Independent Officers All outside directors currently in office satisfy the Conditions for Director Independence determined by the ORIX Nominating Committee. ORIX has also designated all outside directors as independent officers required by the Tokyo Stock Exchange for protection of general shareholders. None of the companies where the outside directors serve as executive officers and the like (including business execution directors) are principal trading partners of ORIX, and ORIX does not have any material interests in them such as donations of large amount of money to them. The monetary criteria concerning “principal trading partner” and “large amount” are set forth in Conditions for Director Independence below. This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. < Conditions for director independence, which are:> i. No individual may be a principal trading partner*, or an executive officer or employee of a principal trading partner of ORIX Group. If such circumstances existed in the past, 1 year must have passed since that person’s departure from such office or employment. *A “principal trading partner” refers to an entity with a business connection to ORIX Group with a transaction amount equivalent to more than the greater of 2% of such entities consolidated total sales (or consolidated total revenues) or 1 million U.S. dollars in the current fiscal year and preceding 3 fiscal years. ii. No individual may directly receive a large amount of compensation (10 million yen or higher in a fiscal year), excluding compensation as a director from ORIX Group in any fiscal year during the current fiscal year and preceding 3 fiscal years. Further, any corporation or other entity in which such individual serves as a consultant, account specialist or legal expert may not receive a large amount of compensation (equivalent to more than the greater of 2% of such entities consolidated total sales (or consolidated total revenues of ORIX Group) or 1 million U.S. dollars) from ORIX Group currently or in the past year. iii. No individual may be a major shareholder of ORIX (10% or higher of issued shares) or a representative of the interests of a major shareholder. iv. No individual may have served as an executive officer of a company having a relationship of concurrent directorship* with ORIX in the current fiscal year and preceding 3 fiscal years. *“Concurrent directorship” refers to a relationship in which an executive officer of ORIX or its subsidiaries also serves as a director of a company in which the individual has been an executive officer and an outside director of ORIX. v. No individual may be a member of the executive board (limited to those who execute business) or be a person executing the business (including an officer, corporate member or employee who executes business of the organization) of any organization (including public interest incorporated associations, public interest incorporated foundations and non-profit corporations) that has received a large amount of donation or financial assistance (annual average of 10 million yen or higher over the past 3 fiscal years) from ORIX Group. vi. No individual may have served as an independent auditor or an accounting advisor (kaikei san-yo), a certified public accountant (or a tax accountant) or a corporate member, a partner or an employee of an audit firm (or a tax accounting firm) who personally performed the audit work (excluding engagement as a supporting role) for ORIX Group in the current fiscal year and preceding 3 fiscal years. vii. None of an individual’s family members* may fall under any of the following: • A person who was an executive officer or an important employee of ORIX Group during the past 3 years. • A person who falls under one of the criteria specified in (i) through (iii), (v) and (vi) above; provided, however, that criterion (i) is limited to an executive officer, sentence two of criterion (ii) is limited to a corporate member or a partner of the corporation or other entity and criterion (vi) is limited to an executive officer or an employee who performs the audit on ORIX Group in person. *Family members include a spouse, those related within the second degree by consanguinity or affinity, or other kin living with the outside director. viii. There must be no material conflict of interest or any possible conflict of interest that might influence the individual’s judgment in performing their duties as an outside director. This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. 2) Action policies relating to effective use of independent outside directors ORIX believes that inviting a certain number of independent outside directors to the Board of Directors and operating the Board of Directors and the three committees are necessary for enhancing the effectiveness of the supervisory functions of business execution. ORIX engages in a variety of business in Japan and overseas, and consequently, inviting outside directors with diverse knowledge and experience to the Board of Directors leads to diversification and invigoration of discussions by the Board of Directors and the three committees. 3) Status of main activities by outside directors (status of attendance and statements at Board of Directors and three committees meetings during the fiscal year ended March 2021) • Mr. Heizo Takenaka attended all 8 of the Board of Directors meetings and 10 out of 11 Audit Committee meetings held in the fiscal year ended March 2021, using his expansive expertise on information regarding environmental, economic, and financial policies both in Japan and overseas in relation to corporate management to effectively supervise the Company’s management by utilizing a wealth of his knowledge and experience from an independent and objective standpoint. In the Board of Directors, he actively made statements and proposals from his position as an economic and financial policy specialist. Additionally, on the Audit Committee, he contributed to deliberations discussing the effectiveness of internal control systems based on his diverse knowledge on business environments both in Japan and overseas in relation to corporate management. • Mr. Michael Cusumano attended all 8 of the Board of Directors meetings and all 4 of the Compensation Committee meetings held in the fiscal year ended March 2021, using his expansive expertise on global authority on business strategy and technology management to effectively supervise the Company’s management by utilizing a wealth of his knowledge and experience from an independent and objective standpoint. In the Board of Directors, he actively made statements and proposals from his position as a technology specialist. Additionally, on the Compensation Committee, he contributed to deliberations discussing executive compensation, utilizing his diverse knowledge including comparative analysis done on global companies. • Ms. Sakie Akiyama attended all 8 of the Board of Directors meetings and all 5 of the Nominating Committee meetings held in the fiscal year ended March 2021, using her expansive expertise on corporate management to effectively supervise the Company’s management by utilizing a wealth of her knowledge and experience from an independent and objective standpoint. In the Board of Directors, she actively made statements and proposals from her position as a corporate management specialist. Additionally, as chair of the Nominating Committee, she contributed to deliberations discussing how the Board of Directors and the Nominating Committee should be constructed to suit our business expansion needs. • Mr. Hiroshi Watanabe attended all 6 of the Board of Directors meetings and all 4 of the Nominating Committee meetings that have taken place since he was officially inducted to the Board of Directors and Nominating Committee, using his expansive expertise on finance and the economy both in Japan and overseas to effectively supervise the Company’s management by utilizing a wealth of his knowledge and experience from an independent and objective standpoint. In the Board of Directors, he actively made statements and proposals from his position as a finance, economic, financial policy, and corporate management specialist. Additionally, on the Nominating Committee, he contributed to deliberations This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. discussing internal and external business environment changes in relation to ORIX. • Ms. Aiko Sekine attended all 6 of the Board of Directors meetings, all 2 of the Compensation Committee meetings, and all 9 of the Audit Committee meetings that have taken place since she was officially inducted to the Board of Directors, Compensation Committee, and Audit Committee, using her expansive expertise on accounting to effectively supervise the Company’s management by utilizing a wealth of her knowledge and experience from an independent and objective standpoint. In the Board of Directors, she actively made statements and proposals from her position as an accounting and finance specialist. Additionally, as chair of the Audit Committee, she periodically received reports from the Internal Audit department, held meetings with company management, and actively held deliberations regarding the effectiveness of internal control systems. [Information Regarding Incentive] Status of Giving Incentive to Directors / Executive Introduced a performance-linked compensation Officers system / introduced a stock option plan / other measures Additional Information ORIX has introduced a performance-linked compensation program, stock option plan, and a share-based compensation plan. Since the fiscal year ended March 2010, no new share warrants have been granted as stock options. Details concerning the share-based compensation plan are set forth in Policy for Determining Compensation of Directors and Executive Officers (Director and Executive Officer Compensation: Disclosure of Policies on Determination of Compensation Amounts and Methods of Calculation in that section). People Applicable for Stock Options Internal directors, outside directors, executive officers, employees, subsidiary directors, subsidiary auditors, subsidiary employees The purpose is to further raise motivation and morale to enhance performance on the part of the directors, executive officers, auditors, and employees of ORIX and its subsidiaries, affiliates, and other companies with which it has a capital relationship. New share warrants have not been granted as stock option since the fiscal year ended March Additional Information 2010. [Information Regarding Director / Executive Officer Compensation] Disclosure Status Partial disclosure on an individual basis Additional Information • Persons who received total compensation of ¥100 million or more in the fiscal year ended March 2021 are indicated in the securities report. The 4 individuals are Makoto Inoue, Representative Executive Officer, President and Chief Executive Officer of ORIX, Shoji Taniguchi (resigned on December 31, 2021), Senior This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. Managing Executive Officer, Satoru Matsuzaki, Senior Managing Executive Officer, and Yoshiteru Suzuki, Senior Managing Executive Officer of ORIX. The details of their compensation are set forth below. Compensation for Makoto Inoue: ¥303 million in total compensation (¥117 million in fixed compensation, ¥75 million in performance-linked compensation and ¥111 million in share-based compensation) Compensation for Shoji Taniguchi: ¥111 million in total compensation (¥41 million in fixed compensation, ¥34 million in performance-linked compensation and ¥34 million in share-based compensation) Compensation for Satoru Matsuzaki: ¥101 million in total compensation (¥39 million in fixed compensation, ¥27 million in performance-linked compensation and ¥34 million in share-based compensation) Compensation for Yoshiteru Suzuki: ¥118 million in total compensation (¥58 million (¥58 from ORIX Corporation USA) in fixed compensation, ¥25 million in performance-linked compensation and ¥34 million in share-based compensation) • Yuichi Nishigori is the 1 officer who resigned during the fiscal year ended March 2021 and who received total compensation actually paid including share-based compensation of ¥100 million or more. The details of their compensation are set forth below. Compensation for Yuichi Nishigori: ¥118 million in total compensation (¥9 million in fixed compensation, ¥3 million in performance-linked compensation, and ¥105 million in share-based compensation Determination Protocols in Place for In place Compensation Amount and/or Calculation Disclosure Regarding Determination Protocols in Place for Compensation Amounts and/or Calculation 1) Details of Officer Compensation (FY 2021.3) Officer compensation paid in the fiscal year ended March 2021 was as follows. • Fixed compensation was ¥93 million paid to the 8 outside directors and ¥564 million paid to the 20 executive officers (including executive officers who also serve as directors*). • Performance-linked compensation was ¥348 million paid to the 20 executive officers (including executive officers who also serve as directors*). • The targets and results with regard to the KPIs of the performance-linked compensation (annual bonuses) listed in the table above are as follows: i. Company-wide performance indicator We targeted a milestone with regard to the consolidated net income annual growth set by the Compensation Committee in order to achieve the Company’s medium-term business objectives and achieved 64%. ii. Division performance indicator We set the performance target for each division based on the company-wide performance target and achieved This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. 50% to 150% (median: 95%) by 18 executive officers (based on the total evaluation including qualitative assessment). • The amount paid as share-based compensation, equal to the number of points confirmed to be provided as the portion for the fiscal year ended March 2021 multiplied by the market price paid by the trust for ORIX shares when those shares were acquired (¥1,479.87 per share), was ¥13 million paid to the 8 outside directors and ¥487 million paid to the 20 executive officers. The total amount of share-based compensation actually paid in the fiscal year was ¥302 million not included in the above amount paid to 2 directors and 2 executive officers who retired during the fiscal year (including executive officers concurrently serving as directors). • 2 directors and 2 executive officers (including executive officers concurrently serving as directors) resigned. As of March 31, 2021, there were 12 directors (including 6 outside directors) and 18 executive officers (including executive officers concurrently serving as directors). *ORIX does not pay director compensation to those executive officers concurrently serving as directors, and therefore, the compensation of the 7 directors also serving as executive officers is included in the amount for executive officer compensation. 2) Policy of Determining Compensation of Directors and Executive Officers • ORIX Group’s business objective is to increase shareholder value over the medium- to long-term. ORIX believes in the importance of each director and executive officer responsibly performing his or her duties and cooperating as members of a team to produce continued growth for the Group. • The Compensation Committee believes that in order to accomplish such business objectives, directors and executive officers should place emphasis not only on performance during the current fiscal year, but also on medium- to long-term results. Accordingly, under the basic policy that compensation should provide effective incentives, ORIX takes such factors into account when making decisions regarding the compensation system and compensation levels for directors and executive officers. • Taking this basic policy into consideration, we have established separate policies for the compensation of directors and executive officers in accordance with their respective roles based on a decision of the Compensation Committee held on June 25, 2021. i. Compensation Policy for Directors • The compensation policy for directors who are not also executive officers aims for compensation composed in a way that is effective in maintaining the supervisory and oversight functions of executive officers’ performance in business operations, which is the main duty of directors. Specifically, ORIX’s compensation structure for directors consists of fixed compensation and share-based compensation (*1). In addition, the Company strives to maintain a competitive level of compensation with director compensation according to the role fulfilled and receives third-party research reports on director compensation for this purpose. • Fixed compensation is in principle the same amount for all directors with certain amounts added for directors serving as members or chairpersons of committees. • For share-based compensation reflecting medium- to long-term performance, directors are granted a fixed number of points on an annual basis for their period of service, and they are paid in ORIX shares This document is a translation of the original Corporate Governance Report in Japanese; in the event of any discrepancy relating to the content of the Report, the Japanese version shall prevail. corresponding to the number of points they have accumulated at the time of retirement. ii. Compensation Policy for Execu