リゾートトラスト（4681） – Corporate Governance Report

Corporate Governance Report RESORTTRUST, INC. Last Update: January 20, 2022 RESORTTRUST, INC. Ariyoshi, Fushimi President Contact: Investor Relations Division Securities Code: 4681 https://www.resorttrust.co.jp/english/ The corporate governance of RESORTTRUST, INC. (the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information 1. Basic Views Under the “Management Philosophy” described below,to ensure the ongoing trust of all stakeholders, such as shareholders and business partners, regional communities and employees, the Company has positioned the further enhancement of corporate governance as its most important management task. The Company is implementing various policies to achieve higher operational transparency and efficiency while striving to expand corporate value through an organizational structure that can respond to changes in the operating environment. Based on a resolution at the 42nd Annual General Meeting of Shareholders on June 26, 2015, the Company adopted the Audit & Supervisory Committee structure. Through this change, the Company is working to enhance the effectiveness of the Annual General Meeting of Shareholders, accelerate decision-making by the Board of Directors, and further strengthen the supervising functions of the Audit & Supervisory Committee. The Company is working to further strengthen the auditing functions of the Audit & Supervisory Committee also by establishing and operating an appropriate organizational auditing structure. In addition, as of April 1, 2021,We have decided to declare our group identity as follows in order to become a corporate group with close membership ties that endure for a lifetime and move forward together as one to the next stage in the implementation of “Connect 50’ Rolling Plan” We will continue to work together with our guests to enhance our corporate value by continuing sustainable management as a corporate group that co-create products and services while always keeping abreast of the changes of the next generation 〈Resorttrust Group Management Philosophy〉 The Resorttrust Group is a dynamic organization of individuals committed to pushing the envelope, blazing new trails, and creating opportunities. We earn the trust and loyalty of our guests and stakeholders through a willingness to take on challenges and by delivering unparalleled quality, sophistication, and hospitality. – 1 – 〈Resorttrust Group Identity〉 ご⼀緒します、いい⼈⽣ より豊かで、しあわせな時間（とき）を創造します ※Japanese only at the moment [Reasons for Non-compliance with Principles of Japan’s Corporate Governance Code] The Company implements each principle of Japan’s Corporate Governance Code (June 11, 2021 revision) [Disclosure Based on the Principles of the Corporate Governance Code] [Principle 1.4: Cross-Shareholdings] The Company sets its basic policy on cross-shareholdings of listed stocks and standards for exercising voting rights as follows. – Basic views As a basic policy, the Company shall not hold any shares as cross-shareholdings except when these holdings are deemed beneficial to maintaining and enhancing corporate value. – Examination of Corporate Value Enhancement Benefits Cross-shareholdings are deemed beneficial when these holdings contribute to maintaining and improving the corporate value of the Resorttrust Group after examining the profitability and growth potential of the investee companies. – Examination The Company evaluates the benefits of its shareholdings per individual stock on a regular and ongoing basis as to whether the purpose of shareholdings is appropriate, as well as whether the benefits and risks associated with such shareholdings are commensurate with the capital cost. For shares which are deemed to have little benefit, the Company shall sell such shares while taking into consideration the impact on the market and other factors. After evaluating individual stocks at the Board of Directors’ meeting in December 2018, the Company decided to sell shares that are deemed to have little benefit, considering the impact on the market. The Company, at the same time, shall continue holding stocks that are deemed beneficial. – Standards for exercising voting rights The Company shall exercise its voting rights based on a comprehensive judgement of whether the investee company is developing an appropriate governance structure and conducting proper decision-making that results in a medium- to long-term improvement in corporate value, and whether these policies can contribute to the improvement of the Resorttrust Group’s corporate value. – Examination of agenda items With regard to the examination of specific agenda items, the Company examines whether to approve or disapprove agenda items through dialogues with the investee company and examinations by dedicated departments. In particular, approval or disapproval of agenda items with a potential to affect corporate value and shareholders’ interests shall be decided in a comprehensive manner upon confirming their objective and impact on the improvement of corporate value. [Principle 1.7: Related Party Transactions] Significant transactions between the Company and its officers or major shareholders (related party transactions) are subject to resolutions by the Board of Directors of the Company. At each fiscal year-end, directors and major shareholders are required to submit a confirmation letter stating whether there are any related party transactions. [Supplementary Principle 2.4.1]With a view to cultivating a corporate culture where everyone is able to work – 2 – with vitality, the Company is engaged in efforts to ensure diversity, and has the following policies for the promotion of female employees, non-Japanese employees, and mid-career employees to management positions. Female employees, who comprise half of all our employees, are an indispensable management resource for the Company, and we understand that supporting their ability to thrive is an important part of our human resources strategy. We support the career development of our female employees in such a way that enables them to continue to shine, and have set transparent numerical targets to ensure that such career progression is realized. *We have set a goal for 2025 of 25%, with the current figure as of April 2021 at 20.7% From the viewpoint of securing a stable labor force and in response to the Group’s expected push to expand the numbers of non-Japanese workers it hires in future, the Company is aiming to promote and employ non-Japanese people to management positions so as to establish a diverse workplace environment in which foreign employees are able to play important roles. As of April 2021, the actual rate is 3.7%, and our policy for the time being is to maintain the current level; however, going forward, we intend to increase this figure in line with increases in the number of non-Japanese users and progress with regard to overseas expansion. From the perspective of diversity and the continuance of corporate culture, we understand that, to a certain degree, it is necessary to promote mid-career employees to management positions. From the perspective of ensuring adequate diversity within the Company, we are examining the best balance with regard to pathways towards promotion into management positions, including internal promotions of new graduates and mid-career employees, and hiring directly from outside the Company. However, for the time being, our policy is to maintain the current level (Actual as of April 2021: 69.6%.). For information regarding our policy for human resource development for ensuring diversity, our policy for maintaining and improving the Company workplace environment, and their respective statuses, please refer to the details provided in “III-3 Measures to Ensure Due Respect for Stakeholders” in this report as well as that details in the “Connect 50 Rolling Plan” Medium-Term Management Plan and the Integrated Report 2021. https://www.resorttrust.co.jp/english/ir/investors/plan/pdf/rolling_2105.pdf https://www.resorttrust.co.jp/ps/qn3x/guest/news/dldata.cgi?CCODE=44&NCODE=10 [Principle 2.6: Function as an Asset Owner of Corporate Pension] Given that the management of the corporate pension reserve fund may affect the stable asset formation of employees as well as the financial status of the Company, the Company allocates personnel with required experience and qualifications, and works to foster such personnel with the aim of appropriately implementing such activities as monitoring of management institutions by corporate pension organizations and the like. The management status is regularly reported to the Company. [Principle 3.1: Full Disclosure] (i) Company objectives (e.g., Philosophy), business strategies and business plans The Philosophy, business strategies and business plans of the Company are disclosed in its Integrated reports（Former Corporate Reports ）and Medium-term Management Plans. Please refer to the Company’s website (https://www.resorttrust.co.jp/english/ir/) (ii) Basic Views and policies on corporate governance based on each principle of the Code (draft) as stated in this report and the securities reports ”yukashoken hokokusho”. (iii) Board of Directors’ policies and procedures in determining the remuneration of the senior management and directors 1. Directors (excluding directors serving concurrently as Audit & Supervisory Committee members) – 3 – (1) Basic policy The remuneration system of directors (excluding directors serving concurrently as Audit & Supervisory Committee members, hereinafter the same) of the Company is intended to fully function as an incentive to boost the Group’s sustainable growth and long-term corporate value, motivate each director, and ensure a level that secures top talent as managers. The basic policy in deciding remuneration for each director is to set at an appropriate level based on the work responsibility of each director. Specifically, the remuneration of directors is comprised of fixed remuneration, retirement benefits, Board Benefit Trust and restricted share remuneration. The remuneration of outside directors is solely comprised of fixed remuneration from the perspective of ensuring their independence. (2) Policy on determining amounts of monetary remuneration (excluding a performance-linked remuneration, etc.) for each director (including policies on determining the timing and conditions of the payment of remuneration, etc.) The basic remuneration of directors of the Company is a monthly fixed remuneration, which is determined according to their positions, work responsibilities, and number of years in office, while comprehensively considering the levels of remuneration at other companies, the Company’s performance and employee salary level. In accordance with Proposal 4. “Final Payment of Retirement Benefits in Line with Abolishment of Retirement Benefits System for Directors (Excluding Outside Directors and Directors Serving Concurrently as Audit & Supervisory Committee Members)” submitted at the 48th Annual General Meeting of Shareholders, the final payment of retirement benefits will be paid to directors of the Company in order to reward their service during their tenure up to said Annual General Meeting of Shareholders. The retirement benefits will be paid at the time of their retirement by considering their positions, years in office, degree of contributions and other factors, according to predetermined standards. (3) Policy on determining contents and amounts or calculation methods of performance-linked remuneration, etc. and non-monetary remuneration (including policies on determining the timing and conditions of the payment of remuneration, etc.) Under the Board Benefit Trust (BBT) for directors of the Company, in order to conduct performance- and share price-conscious management and to share profit-oriented perspectives with its shareholders, the Company grants directors points according to the degree to which they achieved the business performance and in light of their positions, work responsibilities, degree of contributions to the business performance and other factors. Upon retirement, directors receive the shares of the Company corresponding to the number of points they are granted (any fractions of points are paid in cash). Target performance indicators and their figures are determined based on the advice of the Remuneration Advisory Committee so that they meet the aforementioned objectives. Directors will forfeit the right to receive shares, in the event set forth by the Company’s Board of Directors as it is deemed reasonable for the Company to have them forfeit their rights to receive shares. The restricted share remuneration for directors of the Company is aimed at giving them an incentive to continually enhance the Company’s corporate value, and promoting further sharing of value with all shareholders. According to the standards predetermined in light of their positions, work responsibilities, number of years in office and other factors, in principle, directors are allotted at a certain time every year the Company’s shares with restriction on transfer (restricted shares). The Company prohibits directors from transferring, creating a security interest on, or otherwise disposing of restricted shares until their resignation from the position of director of the Company. The Company will acquire restricted shares without contribution, in the event set forth by the Company’s Board of Directors as it is deemed reasonable for the Company to acquire allotted shares without contribution. (4) Policy on determining proportion of the amounts of monetary remuneration, performance-linked remuneration or non-monetary remuneration for each director The composition ratio of each type of remuneration paid to directors of the Company is subject to consultation with the Remuneration Advisory Committee, based on the remuneration levels at other corporations of a similar business scale to that of the Company or corporations belonging to industries or sectors related to the Company. The Board of Directors (a Representative Director who was delegated the authority as described in (5) below) determines the contents of remuneration, etc. for each director by respecting the advice from the Remuneration Advisory Committee. (5) Matters related to determination of contents of remuneration, etc. for each director – 4 – Based on a resolution of the Board of Directors, details of the amounts of remuneration for each individual, the number of points to be granted under the Board Benefit Trust, and the number of restricted shares for allotment are delegated to a Representative Director (if there is more than one Representative Director, to all of them; hereinafter the same). The content of the authority is the determination of the amounts of fixed remuneration and retirement benefits, the number of points to be granted under the Board Benefit Trust, and the number of restricted shares to be allotted to each director. To ensure that the authority is exercised properly, the Representative Director who was delegated the authority shall consult on the draft with the Remuneration Advisory Committee to obtain its advice, and determine the remuneration for each director by respecting the advice from the Committee. 2. Directors serving concurrently as Audit & Supervisory Committee members The amount of remuneration for directors serving concurrently as Audit & Supervisory Committee members is determined within the scope of the annual amount resolved at the Annual General Meeting of Shareholders in consultation with the directors serving concurrently as Audit & Supervisory Committee members. (iv) Appointment, dismissal and nomination of directors The Company nominates candidates for directors and Audit & Supervisory Committee members from a comprehensive viewpoint in terms of timely and precise decision-making potential, appropriateness for the respective positions, and diversity including gender and internationality. Representative Directors and director in charge of the Operation Division prepare a draft of the procedures for appointment, dismissal and nomination upon due consideration in accordance with the above policy. The draft is brought to the Board of Directors for resolution. Nomination of candidates for directors serving concurrently as Audit & Supervisory Committee members is subject to resolutions by the Board of Directors upon obtaining the consent of the Audit & Supervisory Committee in addition to the procedures described above. (v) Explanations with respect to appointment, dismissal and nomination of directors Reasons for the appointment and the dismissal of each of the candidates for director are disclosed in the reference materials for the General Meeting of Shareholders. [Supplementary Principle 3.1.3: Sustainability Initiatives] Please refer to the Company’s Sustainability Website launched in April 2021 for information on the Company’s basic views on sustainability as well as details regarding our various initiatives and data sets. (Sustainability Website is only available in Japanese.) https://www.resorttrust.co.jp/csr/feature/story1.htm https://www.resorttrust.co.jp/csr/data/data.html Please refer to the Integrated Report 2021 for information regarding our investments in human capital and intellectual property. In the report, we provide details about how Company assets such as our relationships with human resources and customers, medical networks, and facility operation/development expertise give us a competitive edge, based on the direction of our future strategies and business challenges. https://www.resorttrust.co.jp/ps/qn3x/guest/news/dldata.cgi?CCODE=44&NCODE=10 [Supplementary Principle 4.1.1: Scope of Matters Delegated to Directors] In accordance with relevant laws and regulations, the Company stipulates in its Articles of Incorporation and discloses that by the resolution at the Board of Directors, the Company may delegate to directors decisions regarding the execution of important operations. The Company has adopted a system to place directors in charge of respective operational areas, and appoints executive officers who are in charge of business execution to assist in carrying out timely and appropriate management and decisions on execution. The scope of execution by directors and executive officers is clearly established in the regulations regarding management authority. [Principle 4.8: Effective use of Independent Outside Directors] Six outside directors are appointed by the Company as independent outside directors, among whom four are – 5 – directors serving concurrently as Audit & Supervisory Committee members. [Principle 4.9: Independence Standard and Qualification for Independent Outside Directors] In addition to the Standards stipulated by the Companies Act and financial instrument exchanges, the Company establishes its own standards which are disclosed in “Other matters relating to Independent Directors” and other sections of this Report. [Supplementary Principle 4.10.1: Rights and Roles of Nomination Committee and Remuneration Committee] As advisory panels to the Board of Directors, the Company has established a Nomination Advisory Committee and a Remuneration Advisory Committee with a majority of members comprised of independent directors. For details on these panels, please refer to “II-1 Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management [Voluntary Establishment of Committees]”. [Supplementary Principle 4.11.1: View on Diversity in Board of Directors] Nomination of director candidates is examined by the Board of Directors in a comprehensive manner in terms of timely and precise decision-making potential, appropriateness for the respective positions, and diversity including gender and internationality. Procedures for the nomination are as described in Principle 3-1 (iv). Please refer to the attached Skill Matrix for information regarding the skills of the respective directors. [Supplementary Principle 4.11.1: View on Balance, Diversity and Size of the Board of Directors as a whole] Nomination of director candidates is examined by the Board of Directors in a comprehensive manner in terms of timely and precise decision-making potential, appropriateness for the respective positions, and diversity including gender and internationality. Procedures for the nomination are as described in Principle 3.1. (iv). [Supplementary Principle 4.11.2: Status of Concurrent Positions of Directors] Status of major concurrent positions of directors is disclosed in notices of convocation of General Meeting of Shareholders and the securities reports. [Supplementary Principle 4.11.3: Analysis and Evaluation of Effectiveness of the Board of Directors and Its Overview] The Company conducted a self-evaluation of the effectiveness of the Board of Directors with the support of an external institution. ■ Method of evaluation: (1) conduct of a survey (in the fourth quarter of the fiscal year ended March 31, 2021) (2) analysis and self-evaluation at the Board of Directors’ meeting based on the result of the survey *The creation of the survey and the compilation of its results were commissioned to an external institution in order to ensure transparency. ■ Members subject to evaluation: directors and executive officers, 24 total As a result of the operations of the Board of Directors based on the analysis and evaluation conducted in the previous fiscal year, high evaluations were given to the composition, size and skills of the Board of Directors, as well as the provision of opportunities for outside directors to fulfill their functions, and the overall evaluation also improved. The Company therefore analyzed and evaluated that the Board of Directors of the Company has fulfilled expected roles appropriately and that the effectiveness of the Board of Directors was fully ensured as in the previous year. Given that there are calls to enhance discussions regarding business strategies at the Board of Directors’ meeting and to review reporting items for that purpose, the Company will also strive for further improvement. As the current composition of the Board of Directors, the ratio of outside directors is 35.3%, more than one-third of the Board. In addition, since June 2018, the Board has two female directors (the ratio of female directors of the Company is 11.8%). Accordingly, the Company believes that these will contribute to further enhancing the effectiveness of the Board of Directors. [Supplementary Principle 4.14.2: Training Policy for Directors] The Company intends to have all directors actively participate in various training programs in order for them to acquire required knowledge in the Company’s business, finance and organizations and fulfill their expected duties and responsibilities in an appropriate manner. Newly appointed directors are required to complete external seminars designed for newly appointed directors in order to help them deepen their understanding and ability to execute their expected duties and – 6 – responsibilities. [Principle 5.1: Policy for Constructive Dialogue with Shareholders] The Company has formulated a “Policy for Constructive Dialogue with Shareholders” which is posted on its website. (https://www.resorttrust.co.jp/english/ir/investors/governance/) 2. Capital Structure Foreign Shareholding Ratio From 10% to less than 20% [Status of Major Shareholders] Name / Company Name Takarazuka Corporation, Inc. The Master Trust Bank of Japan, Ltd. (Trust Account) Custody Bank of Japan, Ltd. (Trust Account) SAPPORO BREWERIES LIMITED Yoshiro Ito Custody Bank of Japan, Ltd. (Trust Account 9) GI Co., Ltd. Custody Bank of Japan, Ltd. (Trust Account 4).. SUMITOMO LIFE INSURANCE COMPANY THE BANK OF NEW YORK MELLON 140044 Number of Shares Owned 13,419,648 12,116,200 6,375,200 3,351,760 3,036,563 2,018,500 1,921,976 1,742,300 1,555,200 1,443,000 Percentage (%) 12.37 11.16 5.87 3.09 2.80 1.86 1.77 1.61 1.43 1.33 Controlling Shareholder (except for Parent Company) Parent Company — None Supplementary Explanation – 3. Corporate Attributes Listed Stock Market and Market Section Fiscal Year-End Type of Business Number of Employees (consolidated) as of the End of the Previous Fiscal Year Sales (consolidated) as of the End of the Previous Fiscal Year Tokyo Stock Exchange First Section Nagoya Stock Exchange First Section March Services 1,000 or more Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year From 10 to less than 50 From ¥100 billion to less than ¥1 trillion – 7 – 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling 5. Other Special Circumstances which may have Material Impact on Corporate Governance Shareholder — — – 8 – II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management 1. Organizational Composition and Operation Organization Form Company with Audit & Supervisory Committee structure [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation Term of Office Stipulated in Articles of Incorporation Chairperson of the Board Number of Directors Appointment of Outside Directors Appointed Number of Outside Directors Number of Independent Directors Outside Directors’ Relationship with the Company (1) 1 year President 25 17 6 6 Name Attribute Yoichi Aiba Satoshi Akahori Toshihisa Nakatani Tomoyo Nonaka Asako Terazawa Masaru Miyake * Categories for “Relationship with the Company” * Lawyer Tax Accountant CPA Other Scholar Othe Relationship with the Company* a b c d e f h g ○ △ △ △ i j k ○ ○ “○” when the executive presently falls or has recently fallen under the category; “△” when the executive fell under the category in the past “●” when a close relative of the executive presently falls or has recently fallen under the category; “▲”when a close relative of the executive fell under the category in the past * a. Executive of the Company or its subsidiaries b. Non-executive director or executive of a parent company of the Company c. Executive of a fellow subsidiary company of the Company d. A party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the listed company or an executive thereof f. Consultant, accountant or legal professional who receives a significant amount of monetary consideration or other property from the Company besides remuneration as an executive g. Major shareholder of the Company (or an executive of the aforementioned major shareholder if the h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) i. Executive of a company, between which and the Company outside executive are mutually appointed (the j. Executive of a company or organization that receives a donation from the Company (the executive shareholder is a legal entity) (the executive himself/herself only) executive himself/herself only) himself/herself only) k. Others – 9 – Outside Directors’ Relationship with the Company (2) Name Audit & Supervisory Committee Member Independent Officer Yoichi Aiba ○ ○ Satoshi Akahori ○ ○ – 10 – Supplementary Explanation of the Relationship Outside director Mr. Yoichi Aiba is a lawyer with no personal or capital relationships between the Company and Mr. Yoichi Aiba, including his close relatives and companies where his close relatives serve as director or auditor. However, with regard to business relationships, the Company has entered into an advisory contract for the Company’s legal affairs with the law firm where Mr. Yoichi Aiba belongs. The amount of annual transactions between the two entities, however, is less than ¥10 million, which is less than 2% of the consolidated net sales of the Company for the latest fiscal year. Outside director Mr. Satoshi Akahori is a tax accountant and there are no personal relationships or capital relationships between the Company and Mr. Satoshi Akahori, including his close relatives and companies where his close relatives assume the position of director or auditor. However, the Company previously had an advisory contract for the Company’s taxation affairs with the tax accounting firm where Mr. Satoshi Akahori belongs. The aforementioned contract came to an end in October 2015. The Reasons of Appointment Mr. Yuichi Aiba was appointed as an outside director in order to utilize his expertise and experience accumulated as a lawyer for management and audits of the Company. As he satisfies the standards on independence established by the Company and the independence criteria stipulated by Tokyo Stock Exchange, the Company has come to a conclusion that there are no potential conflicts of interest with general shareholders. Therefore, he has been assigned as an independent director. Mr. Satoshi Akahori was appointed as an outside director so that he can utilize his expertise and experience accumulated as a tax accountant for management and audits of the Company. As he satisfies the standards on independence established by the Company and the independence criteria stipulated by Tokyo Stock Exchange, the Company has come to a conclusion that there are no potential conflicts of interest with general shareholders. Therefore, he has been assigned as an independent director. amount of annual transactions between the two entities before the termination of the contract is less than ¥10 million, which is less than 2% of the consolidated net sales of the Company for the latest fiscal year. Outside director Mr. Toshihisa Nakatani is a certified public accountant and a tax accountant with no personal or capital relationships between the Company and Mr. Toshihisa Nakatani, including his close relatives and companies where his close relatives serve as director or auditor. However, Mr. Toshihisa Nakatani used to belong to KPMG AZSA & Co., the Company’s accounting auditor, until June 2012 (He has not provided service to the Company from the fiscal year ended March 31, 2003 onwards). The Company has entered into an auditing contract with KPMG AZSA & Co., to conduct audits required under the Companies Act and accounting audits under the Financial Instruments and Exchange Act. Audits are performed not only at the end of fiscal period, but also when necessary and appropriate. The auditing firm to which he currently belongs had received an outsourcing contract from a subsidiary of the Company, but the contract was terminated at the end of June, 2021. The amount of annual transactions between the Mr. Toshihisa Nakatani was appointed as an outside director so that he can utilize his expertise and experience accumulated as a certified public accountant and tax accountant for management and audits of the Company. As he satisfies the standards on independence established by the Company and the independence criteria stipulated by Tokyo Stock Exchange, the Company has come to a conclusion that there are no potential conflicts of interest with general shareholders. Therefore, he has been assigned as an independent director. Toshihisa Nakatani ○ ○ – 11 – two entities before the termination of the contract is less than ¥10 million, which is less than 2% of the consolidated net sales of the Company for the latest fiscal year. . Ms. Tomoyo Nonaka was appointed as an outside director because she has a extensive insight essential for corporate management from an external perspective, specifically in the field of politics, society, environment, etc., as well as diverse experience and achievements in business management after serving in executive positions such as a director, etc. for several enterprises including listed companies. She also has a broad insight in tourism after serving as a tourism ambassador for various local municipalities. Based on the standards under the Companies Act and the Financial Instruments and Exchange Act, as well as the “Standards on independence of independent outside directors” established by the Company, the Company has come to a conclusion that there are no potential conflicts of interest with general shareholders. Therefore, she has been assigned as an independent director since June 2017. As she satisfies the standards on independence established by the Company and the independence criteria stipulated by Tokyo Stock Exchange, the Company has come to a conclusion that there are no potential conflicts of interest with general shareholders. Therefore, he has been assigned as an independent director. Tomoyo Nonaka ○ None – 12 – Ms. Asako Terazawa was appointed as an outside director because she is specialized in theories of management organization and organizational behavior in business administration, has long been engaged in the research in motivating employees and organizational innovation, and has a wealth of experience in corporate research and track record in serving in positions such as a member of an administrative commission, etc. She was appointed in order to utilize these experiences for management and audits of the Company. As she satisfies the standards on independence established by the Company and the independence criteria stipulated by Tokyo Stock Exchange, the Company has come to a conclusion that there are no potential conflicts of interest with general shareholders. Therefore, he has been assigned as an independent director. Mr. Masaru Miyake has long been engaged in public administration as a civil servant, has experience of serving in the position of the vice chairman of a university, and has a wealth of experience and extensive knowledge regarding laws and society, etc. He was appointed as an outside director in order to utilize such experience and knowledge for management and audits of the Company. As he satisfies the standards on independence established by the Company and the independence criteria stipulated by Tokyo Stock Exchange, the Company has come to a conclusion that there are no potential Asako Terazawa ○ None There are no personal relationships or capital relationships between the Company and outside director Mr. Masaru Miyake, including his close relatives and companies where his close relatives assume the position of director or auditor. However, the Company previously had an advisory contract for the Company’s business promotion and recruitment with Mr. Masaru Miyake. The aforementioned contract came to an end in April 2021. The amount of annual transactions between the – 13 – Masaru Miyake ○ ○ conflicts of interest with general shareholders. Therefore, he has been assigned as an independent director. two entities before the termination of the contract is less than ¥10 million, which is less than 2% of the consolidated net sales of the Company for the latest fiscal year. [Audit & Supervisory Committee] Committee’s Composition and Attributes of Chairperson Audit & Supervisory Committee All Committee Members Full-time Members Inside Directors Chairperson Outside Directors 5 1 1 4 Insaide Director Appointment of Directors and/or Staff to Support the Audit & Supervisory Committee Appointed Matters Related to the Independence of Such Directors and/or Staff from Executive Directors The Audit & Supervisory Committee has established a Secretariat of the Audit & Supervisory Committee and provides employees who assist duties of the Audit & Supervisory Committee on a full-time basis as a staff (Audit & Supervisory Committee staff). The Audit & Supervisory Committee staff do not serve concurrently as employees of other divisions and solely follow instructions given by the Audit & Supervisory Committee members in order to ensure the effectiveness of directions given to the Audit & Supervisory Committee staff. Status of Cooperation among Audit & Supervisory Committee, Accounting Auditor and Internal Audit Departments The Audit & Supervisory Committee receives reports on audits and other matters from the Audit Division, which is in charge of internal audits and internal controls, and the Risk Management Division, which is in charge of risk management, and gives instructions to the Audit Division on divisions subject to audit and priority items for auditing as required. The Audit & Supervisory Committee regularly receives reports and explanations from the accounting auditor on its auditing plans and results of audits, based on which the Audit & Supervisory Committee carries out examination of the results of financial statement audits and internal control audits. The Committee also receives reports and explanations on the quality control framework of the accounting auditor. [Voluntary Establishment of Committees] Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Remuneration Committee Established – 14 – Committee’s Name, Composition, and Attributes of Chairperson Committee’s Name Members Full-time Members Inside Directors Outside Directors Outside Experts Others Chairperson 7 7 0 0 3 3 4 4 0 0 0 Outside Director 0 Outside Director Committee Corresponding to Nomination Committee Committee Corresponding to Remuneration Committee Nomination Advisory Committee Remuneration Advisory Committee Supplementary Explanation The Nomination Advisory Committee deliberates on matters concerning the appointment and dismissal of directors, and provides advice and proposals to the Board of Directors. The Committee attaches importance to its independence due to its function to conduct deliberations in response to the inquiries from the President and to provide advice and proposals to the Board of Directors. The Committee is chaired by Mr. Satoshi Akahori, an outside director serving concurrently as Audit & Supervisory Committee member, and attended by seven members, including three Representative Directors (Mr. Yoshiro Ito, Mr. Katsuyasu Ito and Mr. Ariyoshi Fushimi), an outside director Ms. Tomoyo Nonaka, and two outside directors serving concurrently as Audit & Supervisory Committee members, Mr. Masaru Miyakeand Mr. Toshihisa Nakatani. The Committee met one time during FY2020 and the results were reported at the Board of Directors’ meeting. The Remuneration Advisory Committee deliberates on matters concerning the remuneration for directors (excluding directors serving concurrently as Audit & Supervisory Committee members) and provides advice and proposals to the Board of Directors. The Committee attaches importance to its independence due to its function to conduct deliberations in response to the inquiries from the President and to provide advice and proposals to the Board of Directors. The Committee is chaired by Mr. Satoshi Akahori, an outside director serving concurrently as Audit & Supervisory Committee member, and attended by seven members, including three Representative Directors (Mr. Yoshiro Ito, Mr. Katsuyasu Ito and Mr. Ariyoshi Fushimi), an outside director Ms. Tomoyo Nonaka, and two outside directors serving concurrently as Audit & Supervisory Committee members, Mr. Masaru Miyake and Mr. Toshihisa Nakatani. The Committee met three times during FY2020 and the results were reported at the Board of Directors’ meeting. [Independent Directors] Number of Independent Directors 6 Other matters relating to Independent Directors Six outside directors (four males and two female) are nominated by the Company as independent outside directors. Standards on independence of independent outside directors of the Company are as follows. (1) Standards on independence of independent outside directors of the Company are defined as follows. An Outside director is considered independent if he/she does not fall under any of the following. 1. Important employee such as executive director or executive officer of the Company or its consolidated subsidiaries. 2. Major shareholder of the Company (holder of 10% or more of the total voting rights at the end of the most recent fiscal year), or an executive thereof. 3. A party whose major client or supplier* is the Company or an executive thereof. 4. Major client or supplier* of the Company, or an executive thereof. 5. Accounting auditor of the Company or its consolidated subsidiaries or an employee or others of such accounting auditor who is in charge of audits of the Company or its consolidated subsidiaries. – 15 – 6. Consultant, accountant or legal professional who receives over ¥10 million per year of monetary consideration or other property from the Company besides remuneration as an executive. However, if a party who receives such property is an organization such as corporation or association, an executive of such organization whose property received from the Company accounts for over 2% of its annual income. 7. Major lender of the Company (lender whose name is listed as a major lender in the business report for the most recent fiscal year), or an executive thereof. 8. Person receiving donation of over ¥10 million per year from the Company. However, if a party who receives such donation is an organization such as corporation or association, an executive of such organization whose property received from the Company accounts for over 2% of its annual income. 9. Person who falls under any of the above 2 to 8 within the last three years. 10. Close relatives within the second degree of kinship of the person who falls under the above 1 to 9 (limited to those who are important). 11. In addition to what is listed in the preceding items, a person who has special circumstances, such as having possible conflicts of interest with the Company, which may prevent him/her from fulfilling duties as an independent outside director. * “Major client or supplier” refers to parties whose transactions with the Company exceed 2% of annual consolidated sales for the most recent fiscal year. (2) In addition to the standards provided in (1) above, extensive knowledge and abundant experience necessary for auditing and overseeing the compliance and business management of directors are used as criteria for appointing independent outside directors. [Incentives] Directors Supplementary Explanation Implementation Status of Incentive Policies for Introduction of Performance-linked Remuneration, and Stock Options,Other The Company expects its directors (excluding Audit & Supervisory Committee members) to conduct performance- and share price-conscious management and to share profit-oriented perspectives with its shareholders. With a view to achieving the aforementioned objective, the Company has adopted a “Board Benefit Trust (BBT),” an officer stock ownership plan under which the Company gives points to directors (excluding Audit & Supervisory Committee members) according to the degree to which they achieved the business performance in line with the Company’s officer stock ownership regulations. Upon retirement, the number of points earned determines the number of shares provided by the BBT. (Points are not given to outside directors.) An indicator used for the “Board Benefit Trust (BBT),” a performance-linked remuneration, is the degree of achievement of “net income attributable to owners of parent” in the performance forecast, which is determined at the beginning of each fiscal year. The reason for adopting this indicator is to commit the Company’s consideration to the common interests of shareholders. In addition, it was resolved at the 44th Annual General Meeting of Shareholders on June 29, 2017 and the Board of Directors’ meeting on the same day to issue subscription rights to shares without consideration with the intent of stock options. The objective of issuance is to further enhance the Company’s value as a listed company by further boosting the motivation and morale of directors (excluding outside directors and Audit & Supervisory Committee members) and employees (including executive officers) of the Company as well as directors and employees of its associates for improving business performance, and by sharing a mutual interest with shareholders of the Company. The restricted share remuneration is aimed at giving directors (excluding outside directors and directors serving concurrently as Audit & Supervisory Committee members) an incentive to enhance the Company’s corporate value, and promoting further sharing of value with all shareholders, as determined at the 48th Annual General Meeting of Shareholders held on June 29, 2021 and the meeting of the Board of Directors held on the same day. – 16 – Inside Directors, Employee , Subsidiaries’ Directors , Subsidiaries’ Executive Officers (Shikkoyaku) , Subsidiaries’ Employee, and Other Recipients of Stock Options Supplementary Explanation [Director Remuneration] Supplementary Explanation Recipients of stock options are decided after comprehensively considering the degree to which they contributed to improving business performance and other accomplishments. Disclosure of Individual Directors’ Remuneration Only selected directors’ remuneration are disclosed Directors whose consolidated remuneration and others are ¥100 million or more in total are separately disclosed in the securities reports. Securities reports are posted on the Company’s website and are available for public inspection. Policy on Determining Remuneration Amounts Established and Calculation Methods Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods For disclosure of policy on determining remuneration amounts and calculation methods, please refer to [Principle 3.1: Full Disclosure] (iii) of this report. [Supporting System for Outside Directors] With regard to a framework to support outside directors, Director of the Secretariat of Audit and Supervisory Committee and one staff member is allocated, and works on a full-time basis to support the duties of six directors serving concurrently as Audit & Supervisory Committee members who constitutes the Audit & Supervisory Committee. In addition, auditing effectiveness is reinforced by enhancing the function of the supporting framework for the five outside directors (including directors serving concurrently as Audit & Supervisory Committee members) under close collaboration among relevant divisions. [Retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)] Information on retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.) Number of retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.) 0 Others Currently, there are no eligible persons. – 17 – 2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System) – As a corporate decision-making body, the Company’s Board of Directors discusses and decides the matters designated by laws, decides or approves basic management policies and important matters concerning business execution, and oversees business execution by directors (15 males and 2 females). – To approve important managerial matters, the Company’s Board of Directors possesses the highest decision-making authority under the regulations regarding management authority. – The Chairperson of the Board is a chief operating officer serving as a Representative Director (Mr. Ariyoshi Fushimi, COO). The Board of Directors conducts transparent, fair, speedy and resolute decision-making at the Board of Directors’ meeting that is held monthly with the attendance of all directors. – The Board of Directors met 16 times during FY2020 .- The Company adopts the Audit & Supervisory Committee structure as its corporate governance structure, and audits are conducted by directors serving concurrently as Audit & Supervisory Committee members. – Four out of five Audit & Supervisory Committee members (five males and 0 female) are Outside directors and attend the Board of Directors’ meeting held every month. Full-time directors serving concurrently as Audit & Supervisory Committee members attend Executive Committee and other important meetings to establish a fair management monitoring framework. The Audit & Supervisory Committee also reviews whether corporate governance is functioning properly through interviews with directors (excluding Audit & Supervisory Committee members). – The Audit & Supervisory Committee has established the Secretariat of the Audit & Supervisory Committee to assist the their duties and allocates Director of the Secretariat of Audit and Supervisory Committee and one full-time staff in order to establish a structure that contributes to the Audit & Supervisory Committee’s effective auditing and overseeing activities. – Directors serving concurrently as Audit & Supervisory Committee members receive monthly reports on the result of operational audits conducted systematically on all divisions by the Audit Division. They also receive reports on the results of evaluation of development of internal control over financial reporting and the status of its operation as necessary. – The Audit Division engages in systematic operational audits on all divisions and evaluation of internal control over financial reporting. The Audit Division reports the results of the above to the President and COO while striving to enhance the effectiveness of internal control through disclosure of the results of audit or evaluation to relevant divisions in order to request improvement. Similarly, the Audit Division reports such results to the Audit & Supervisory Committee and exchange opinions with the Audit & Supervisory Committee, together with the Risk Management Division. – The General Manager of the Audit Division accompanies the Audit & Supervisory Committee during audits at the request of the Audit & Supervisory Committee. Director of the Secretariat of Audit and Supervisory Committee provides materials necessary for auditing to each of the Audit & Supervisory Committee members as well as important internal information as appropriate. – The Company adopts an executive officer system in order to respond precisely to the management environment, accelerate decision-making and train management personnel. The Company has eight male executive officers and zero female executive officer. – Nomination of candidates for director and Audit & Supervisory Committee member of the Company is subject to resolutions by the Board of Directors as provided in [Principle 3.1 Full Disclosure]. 3. Reasons for Adoption of Current Corporate Governance System The Company has adopted an Audit & Supervisory Committee structure and the Audit & Supervisory Committee in June 2015, which consists of five directors serving concurrently as Audit & Supervisory Committee members including four outside directors, audits and oversees the directors’ execution of duties. Through transparent, fair, speedy and resolute decision-making, the Company’s Board of Directors aims to sustainably improve corporate value by striving to establish and enforce an appropriate and timely governance framework. As for the decision-making process of important matters, the division proposing agenda items submits proposals to the Executive Committee held monthly, where such proposals are deliberated from various perspectives, and important matters are then discussed at the regular Board of Directors’ meetings held monthly before a decision is made. To facilitate speedy and precise management and executive decisions, the Company has appointed eight executive officers who are in charge of business execution. – 18 – III. Implementation of Measures for Shareholders and Other Stakeholders 1. Measures to Vitalize the General Meeting of Shareholders and Smooth Exercise of Voting Rights Supplementary Explanations The Company aims to send notice of the General Meeting of Shareholders as early as possible to provide shareholders with adequate time to examine proposals to be resolved. The notice of the 48th Annual General Meeting of Shareholders was sent out on Wednesday, June 9, 2021. In addition, content of the notice of General Meeting of Shareholders was posted on TDnet and the Company website from Monday, June 7, 2021, before the mailing date. It is not the Company’s policy to set the General Meeting of Shareholders on a peak date. However, due to a venue reservation matters, the Annual General Meeting of Shareholder for the fiscal year ended March 31, 2021 was held on a peak date.. Electronic exercise of voting rights is possible through the Internet. The Company selects venues for the General Meeting of Shareholders at external facilities conveniently located in terms of public transportation, and the business report is conducted with the aid of visual images at the meetings. (In order to prevent the spread of COVID-19 and to ensure the safety of shareholders, we have adopted a pre-registration system for the 48th Annual General Meeting of Shareholders, and will give entry priority to pre-registered shareholders.) Early Notification of General Meeting of Shareholders Scheduling General Meeting of Shareholders Avoiding the Peak Day Allowing Electronic Exercise of Voting Rights Other 2. IR Activities Explanations presented by the Company representative Preparation and Publication of Disclosure Policy Regular Investor Briefings for Individual Investors Regular Investor Briefings for Analysts and Institutional Investors Regular Investor Briefings for Overseas Investors Posting of IR Materials on Website Supplementary Explanations The Company’s basic policy is “to conduct active disclosure and aim for highly transparent and fair management.” In line with timely disclosure rules and internal regulations, the Company collects, manages and publicly presents information. The same information is also posted on the Company’s official website. https://www.resorttrust.co.jp/english/ir/disclosure_policy/ The Company delivers presentations at briefing sessions for individual investors, organized by securities companies and IR support firms. (The Company from representative will participating due to COVID-19.) The Company holds financial results briefings, and provides explanations and answers to questions, for a number of analysts and institutional investors. The Company in overseas IR conferences hosted by securities investors companies, and visits individually to provide explanations. The Company posts various pieces of IR information, including financial results, materials for timely disclosures other than financial results, securities reports or quarterly reports, financial results briefing materials and Integrated reportsrepresentative participates institutional refrain No Yes Yes – 19 – Establishment of Department and/or Manager in Charge of IR （Former Corporate Reports ）. Division in charge: Investor Relations Division Officer in charge: Takeshi Makino, General Manager, Investor Relations Division 3. Measures to Ensure Due Respect for Stakeholders Implementation of Environmental Activities, CSR Activities etc. Supplementary Explanations The Company is implementing various measures toward realizing a sustainable society (sustainability) through its business activities. Our basic stance, actual measures and various data are disclosed on the Company’s website. We will continue to broaden the scope of disclosure. https://www.resorttrust.co.jp/csr/ *Japanese Only In order to pursue sustainability across the entire Group in earnest, we newly launched an SDGs project in May FY2021, which would later become an SDGs committee (tentative name). We will pursue our sustainable management alongside the renewed identification of the Group’s materialities (key issues). [Scheme to Protect Internal Whistleblowers] To raise the awareness of the crisis management in each and every employee, the Company has established a scheme to protect internal whistleblowers in 2002. Further, in response to the enforcement of the Whistleblower Protection Act on April 1, 2006, the Company has revised the system in a constructive manner to enhance the system. [Human Resources Strategies] ■ Policies on efforts We understand that the source of value creation for the Group is the human-oriented relationship of trust with our guests, which we have built by focusing on membership-like features, forging strong ties with customers to grow and move forward together, and responding to the expanding demand for leisure and health. For this reason, we believe it is important that each and every employee of the Resorttrust Group (RTG) is engaged in their respective missions, asking themselves what values should be offered to the society. Based on this understanding and upon recognizing the unified self-image of RTG, we announced our commitment to tirelessly creating even better and richer lives, more affluent time and prosperous moment for our guests, with “Together for a wonderful life” as our identity to keep close ties with our guests and to move forward with them. To realize this vision, we will focus on the creation of human resources. ■ Foremost tasks 1) Amalgamation and effective use of Group human resources information 2) Development of brand personnel through implementation of junior employee development programs 3) Production of next-generation leaders 4) Enhancement of human resources management capabilities 5) Improvement of organization and working environments [ Diversity Promotion ] ■ Policies on efforts With a view to cultivating a work environment and corporate culture where everyone is able to work with vitality, the Company defined its ideal state for diversity promotion which consists of the following: 1. “Corporate culture that maximizes individual capability,” 2. “Continuous employment” Others – 20 – these programs and 3. “Sustainable growth.” Toward achieving them, various measures are being implemented. The CSR Promotion Office within the Human Resources Management Division is dedicated to the enhancement of internal programs and to employees, and acquisition of dissemination of certifications and recognitions granted by government agencies and local governments. In addition, in keeping with each department’s different business characteristics and strengths, the Office is promoting effective efforts in coordination with promotion members in the department, in order to resolve individual issues in an effective and efficient manner. We aim to link these efforts to the hospitality for customers from a diversified perspective, thereby pursue the fulfillment of the Company’s Philosophy of “Excellent Hospitality.” ■ Examples of efforts -Targets and Results Ratio of Resorttrust Group’s management positions held by women 20%(Targets as of 2020) 25%(Targets as of 2025) 20.7%(Results as of April 1, 2021) -Work-life balance support Introduction of short-term childcare leave Establishment of a Babysitter Program Workshop for supporting employees’ work-life balance (total number of participants: 244 for childcare; 801 for nursing care) Distribution of handbook for balancing work and childcare/nursing care and handbook for giving nursing care As initiatives for LGBT, we implemented “e-learning” for all employees and a “training for managers” targeted at all managers, and distributed “LGBT handbooks” for the entire company. -Dissemination to employees Hosting of a training for female employees in sales roles (Shining Forum) with the aim of supporting career development of female employees at Membership department < February 2016, December 2016, January 2018, October 2018> Hosting of a seminar for managers with the aim of maximizing the role of employees and work style reform at Membership department Hosting of a training for managers with the aim of organizational innovation at Hotel and Restaurant department (name at the time of training) -Awards and Accreditation Received a “kurumin certification (two stars) as