野村不動産ホールディングス（3231） – Corporate Governance Report

(Translation) Corporate Governance Report April 1, 2022 Nomura Real Estate Holdings, Inc. Representative: Eiji Kutsukake, President and Representative Director Contact: nrehd-ir@nomura-re.co.jp Stock code: 3231 https://www.nomura-re-hd.co.jp/english/ Corporate governance at Nomura Real Estate Holdings, Inc. is as follows: I. Basic Viewpoints regarding Corporate Governance and Capital Structure, Corporate Attributes and Other Basic Information 1. Basic Viewpoints The Company has established a basic viewpoint regarding corporate governance in the Basic Corporate Governance Policy. Please refer to the Company’s website for details. Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf [Reasons for Non-Compliance with Each Principle of the Corporate Governance Code] The information in this section is based on the revised version of Japan’s Corporate Governance Code effective in June 2021. (This includes principles for the Prime Market.) [Supplementary Principle 4-1-3] Proper Supervision of Successor Plans for CEO, etc. (Planning) The Company believes that the appropriate appointment process of its CEO, i.e. one that is carried out in line with the Company’s corporate philosophy and management strategies and which also considers external candidates, is important for realizing sustainable growth. As for the plan for the CEO’s successor, based on the respective appointment criteria for officers and for the CEO, the Company has established its training policy and the process up to the CEO’s election. Going forward, in addition to the Advisory Committee Relating to Nominations and Compensation providing regular monitoring and reporting to the Board of Directors, the Company will strive for the further enhancement of the structure and content of training, to ensure that the training of successor candidates, in relation to the aforementioned established successor plan, goes as planned. [Disclosure in accordance with Each Principle of the Corporate Governance Code] The information in this section is based on the revised version of Japan’s Corporate Governance Code effective in June 2021. (This includes principles for the Prime Market.) 1 (Translation) [Principle 1-4] Cross-Shareholdings The Company has established the Basic Policy Concerning Cross-Shareholdings within the Basic Corporate Governance Policy. Please refer to the Company’s website for details. Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf [Principle 1-7] Transactions with Related Parties The Company has established procedures regarding transactions with related parties such as directors, executive officers, and major shareholders, etc. in the Basic Corporate Governance Policy. Please refer to the Company’s website for details. Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf [Supplementary Principle 2-4-1] Ensuring Diversity in the Promotion to Core Human Resources The Group recognizes that the innovations brought about by diversity are important for the continued creation of new value, and is working to promote diversity and create fair and rewarding workplaces so that human resources with a variety of perspectives and ways of thinking, regardless of their attributes, can fully demonstrate their personalities and capabilities. Please refer to the Company’s website for details on the approach regarding the promotion of diversity, and the targets, current conditions, etc. regarding the female manager ratio. Human Resources: https://www.nomura-re-hd.co.jp/english/sustainability/labor/diversity.html Integrated Report: https://www.nomura-re-hd.co.jp/english/ir/ir_library/annualreport.html Regarding foreign nationals and midcareer hires, the Group does not recognize the circumstances regarding the promotion to manager positions as a special issue and, going forward, it will continue to promote individuals in accordance with their abilities regardless of nationality, when they were hired, [Principle 2-6] Fulfilling Role as Asset Owner for Corporate Pension Plan To fulfill the role expected of it as the asset owner for the corporate pension plan, the Group’s major business company, Nomura Real Estate Development Co., Ltd., established the Guidelines for Pension Plan Management and the Guidelines Regarding Management Policies and Management Criteria for the Defined-Benefit Corporate Pension Plan based on the guidelines provided by the Ministry of Health, Labour and Welfare, and is appropriately managing and administering the corporate pension plan with a Pension Committee. As for the management of pension assets, the Company’s goal is to secure the total profit necessary for stable employee asset composition in the long term, while only taking acceptable risks. Also, the Company reviews the asset allocation and other matters as necessary relying on external knowledge, and regularly discloses the financial situation to employees, which includes information about assets, contributions, and liabilities. [Principle 3-1] Enhance Information Disclosure 2 etc. (Translation) (1) The Group has formulated the Group Philosophy and the Mid- to Long-term Business Plan. In addition, the Group promotes management strategies and Sustainability in an integrated manner. Please refer to the Company’s website for details. Group Philosophy: https://www.nomura-re-hd.co.jp/english/company/philosophy.html Mid- to Long-term Business Plan: https://www.nomura-re-hd.co.jp/english/ir/management/plan.html Sustainability: https://www.nomura-re-hd.co.jp/english/csr/theme/ Integrated Report is published in order to foster understanding among shareholders, investors, and other stakeholders of the Group’s strategies and measures toward the creation of mid- to long-term value. Integrated Report: https://www.nomura-re-hd.co.jp/english/ir/ir_library/annualreport.html (2) The Company has formulated the Basic Corporate Governance Policy and established a basic viewpoint regarding corporate governance. Please refer to the Company’s website for details. Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf (3) Please refer to “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of this report regarding the policy and procedures to decide compensation for management and directors. (4) The Company has a policy of appointing and nominating individuals to management positions who, irrespective of their nationality or gender, have outstanding character, insight, and capabilities. Also, following discussion at the Advisory Committee Relating to Nominations and Compensation, the Board of Directors determines to appoint or dismiss management and nominate candidates for directors based on the criteria for appointment and dismissal of officers, which was established following primarily discussion at the Advisory Committee Relating to Nominations and Compensation. (5) Please refer to the “Reference Documents for the General Meeting of Shareholders” attached to the Notice of Convocation of Ordinary General Meeting of Shareholders regarding the reasons for the nomination of individual candidates for directors. Notice of Convocation of Ordinary General Meeting of Shareholders: https://www.nomura-re-hd.co.jp/english/ir/ir_library/generalMeeting.html. Also, please refer to section “II-1. Organization Structures and Organizational Operations [Directors] Relationship with the Company (2)” of this report regarding the reason for the appointment of external directors. Notifications regarding the dismissal of management will be provided on the Company’s website and by other means. 3 (Translation) [Supplementary Principle 3-1-3] Sustainability Initiatives With our Group Vision of “New Value, Real Value,” the Group promotes management strategies and sustainability-related initiatives in an integrated manner. In addition, as the business assets that support the value creation of the Group, the Group recognizes the importance of human capital, intellectual property, etc. The Group has stated its approaches related to human resource strategies, development, etc. in the Integrated Report, and is currently preparing its approach, etc. regarding intellectual property. Regarding the promotion of sustainability activities, the Group has positioned its response to environmental and climate change as an important management issue. Based on this concept, the Group has agreed to the TCFD recommendations (September 2020) and discloses information in line with the recommendations. Please refer to the Company’s website for details. Integrated Report: https://www.nomura-re-hd.co.jp/english/ir/ir_library/annualreport.html Sustainability Report: https://www.nomura-re-hd.co.jp/english/sustainability/download/index.html Response to the TCFD: https://www.nomura-re-hd.co.jp/english/sustainability/special/ [Supplementary Principle 4-1-1] Scope of Delegation to Management In addition to matters stipulated in laws and regulations and the Articles of Incorporation, the Board of Directors makes decisions on important matters concerning management of the Group stipulated in the Board of Directors Regulations and the Regulations Primarily Regarding Organizations and Resolutions such as the formulation of the Group’s basic management policies and the appointment and dismissal of executive officers. Certain matters determined by resolution of the Board of Directors shall be approved by the Management Committee or other internal approval systems. [Principle 4-9] Criteria for Impartiality of Independent External Directors The Company has established Criteria for Impartiality of Independent External Directors in the Basic Corporate Governance Policy. Please refer to the Company’s website for details. Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf [Supplementary Principle 4-10-1] Appropriate Involvement and Advice from Independent External Directors through the Establishment of Independent Nomination and Compensation Committees The Company has stipulated the establishment of an advisory committee relating to nominations and compensation in the Basic Corporate Governance Policy. Please refer to the Company’s website for details. Regarding authorities and roles of the committee, please refer to section “II-1. Organization Structures and Organizational Operations [Voluntary Committee] Supplementary Information” of this report. Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf 4 (Translation) for details. [Supplementary Principle 4-11-1] Viewpoint Concerning the Balance, etc. of the Board of Directors, and Identification of the Skills and Expected Areas of Expertise of Directors The Company has established the Viewpoint Concerning the Balance, Diversity, and the Scale of the Board of Directors in the Basic Corporate Governance Policy. Please refer to the Company’s website Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf In addition, the Company discloses a skills matrix, which identifies the Group’s expected areas of expertise of Directors, in the “Reference Documents for the General Meeting of Shareholders” attached to the Notice of Convocation of Ordinary General Meeting of Shareholders. Notice of Convocation of Ordinary General Meetings of Shareholders: https://www.nomura-re-hd.co.jp/english/ir/ir_library/generalMeeting.html [Supplementary Principle 4-11-2] Concurrent Positions Held by Directors Please refer to the “Reference Documents for the General Meeting of Shareholders” attached to the Notice of Convocation of Ordinary General Meeting of Shareholders regarding the main concurrent positions held at other companies by directors. In its Basic Corporate Governance Policy, the Company stipulates “Directors dedicate sufficient time for the Company, and execute their duties as Directors.” Also, the Company receives reports on the concurrent positions by external directors as necessary and confirms that they are able to execute their roles and duties as the Company’s directors sufficiently. Notice of Convocation of Ordinary General Meetings of Shareholders: https://www.nomura-re-hd.co.jp/english/ir/ir_library/generalMeeting.html Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf [Supplementary Principle 4-11-3] Assessment of the Effectiveness of the Board of Directors For the Assessment of the Effectiveness of the Board of Directors in Fiscal Year ended March 2021, as was the case in the previous fiscal year, the Company conducted questionnaires and interviews of all directors (including Audit & Supervisory Committee Members) utilizing a third-party evaluation organization. The analysis and assessment based on discussions at a meeting of the Board of Directors regarding the results are outlined below. The scale of the Board of Directors and the ratio of independent external directors are broadly Members appropriate. Discussions Discussions are free and lively, exceeding internal and external limits and leveraging the 5 (Translation) opinions, etc. from external directors. Operation knowledge and experience of each Director. In particular, discussions were enhanced through the The introduction of executive summaries and continuous improvements to the operation, such as ensuring provision of materials prior to meetings, were broadly evaluated as having contributed to improving the effectiveness of the Board of Directors. On the other hand, there is further room for improvement regarding the operation, such as further clarifying the discussion points in the proposal explanations and materials. By continuing to work for thorough improvements to the operation, the Company will take measures to further improve the effectiveness of the Board of Directors. Matters for discussion functions. The progress of the initiatives established to address various issues is tracked using a “Priority Issue List” set up for monitoring by the Board of Directors, and the Company makes efforts to enhance governance and upgrade discussions to bring about improvements to risk management and other Meanwhile, the Board of Directors must further strengthen strategic discussions that take into account mid- to long-term perspectives on the Company’s business strategy for the post-COVID-19 world, digital strategy, promotion of sustainability, etc. For the fiscal year ending March 2022, enhancing strategy discussions and optimizing governance have been designated priority measures, and the Company will promote initiatives aimed at further improving corporate value and strengthening corporate governance. Going forward, the Company will regularly grasp areas for improvement by conducting an assessment of the effectiveness of the Board of Directors each year and will further improve the effectiveness of the Board of Directors. [Supplementary Principle 4-14-2] Training Policy for Directors The Company provides training that takes into consideration the Company’s corporate philosophy and management strategies. The Company also regularly provides opportunities for all directors to receive training from guest lecturers from outside the Company, to improve their knowledge of topics such as corporate governance and DX. Also, when external directors assume office, they are provided with an explanation regarding topics such as the Group’s history, business framework, and business model, to deepen their understanding of said topics. Then after the external directors’ tenures begin, in addition to ensuring regular opportunities for training, the Company also provides opportunities for them to tour the Company’s properties. 6 (Translation) The Company has established the policy regarding director training and development in the Basic Corporate Governance Policy. Please refer to the Company’s website for details. Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf [Principle 5-1] Policy Concerning Constructive Dialogue with Shareholders The Company has established the Policy Concerning Constructive Dialogue with Shareholders in the Basic Corporate Governance Policy. Please refer to the Company’s website for details. Basic Corporate Governance Policy: https://www.nomura-re-hd.co.jp/english/ir/pdf/cgpolicy.pdf 2. Capital Structure Percentage of shares held by foreign investors 30% or more [Description of Major Shareholders] Name of shareholder Number of shares held Shareholding (Shares) (%) 35.49 8.48 5.22 1.80 1.65 1.17 1.14 1.12 1.03 0.98 Nomura Holdings, Inc. The Master Trust Bank of Japan, Ltd. (Trust account) Custody Bank of Japan, Ltd. (Trust account) Custody Bank of Japan, Ltd. (Trust account 7) Nomura Real Estate Holdings Employee Shareholding Association THE BANK OF NEW YORK 133970 The Master Trust Bank of Japan, Ltd. (BIP (Board Incentive Plan) trust account 76272) 64,777,500 15,493,300 9,530,100 3,302,100 3,016,522 2,136,700 2,091,166 STATE STREET BANK WEST CLIENT – TREATY 2,050,784 505234 JPMorgan Securities Japan Co., Ltd. Custody Bank of Japan, Ltd. (Trust account 9) 1,894,871 1,790,700 Existence of controlling shareholders (excluding parent company) Existence of parent company ― None 3. Corporate Attributes Stock exchange and section First Section, Tokyo 7 (Translation) Fiscal year-end Industry year (consolidated) March Real Estate Number of employees at the end of the previous fiscal More than 1,000 persons Sales revenue during the previous fiscal year More than ¥100 billion but less than ¥1 (consolidated) trillion Number of consolidated subsidiaries at the end of the previous fiscal year More than 10 but less than 50 companies 8 (Translation) 4. Guidelines for Measures to Protect Minority Shareholders When Conducting Transactions with Controlling Shareholder 5. Other Particular Conditions That May Materially Affect Corporate Governance II. Management Organization and Other Corporate Governance Systems concerning Management Decision-Making, Execution and Supervision 1. Organization Structures and Organizational Operations Organizational form [Directors] Company with Audit & Supervisory Committee Number of Directors in Articles of Incorporation 18 persons Term of Office for Directors in Articles of Incorporation Chairman of the Board of Directors Number of Directors Revised Election of External Directors Number of External Directors Revised Number of External Directors designated as Independent Directors Revised 1 year President) 11 persons Elected 4 persons 4 persons Chairman (not serving concurrently as Relationship with the Company (1) Revised Name Association Tetsuro Higashi From another company Yoshio Mogi From another company Akiko Miyakawa Certified public accountant Tetsu Takahashi Attorney (*Note) Relationship with the Company (*) a b c d e f g h i j k △ ・Selection criteria regarding relationship with the Company ・For (a) through (k) below, a circle (〇) indicates the current status of the individual, and a triangle 9 ― ― (Translation) (△) indicates the past status of the individual. ・For (a) through (k) below, a filled-in circle (●) indicates the current status of a relative of the individual, and a filled-in triangle (▲) indicates the past status of a relative of the individual. (a) A business executor of a listed company or its subsidiary (b) A business executor or a non-executive director of a parent company of a listed company (c) A business executor of a sister company of a listed company (d) An individual whose major business client is a listed company or a business executor of said individual (e) A major business client of a listed company or a business executor of said business client (f) A consultant, accounting specialist, or legal professional who receives a substantial amount of money or assets in addition to the customary remuneration from a listed company (g) A major shareholder of a listed company (In the case that said major shareholder is a corporation, a business executor thereof) (h) A business executor of a business client (that does not fall under any of (d), (e), or (f)) of a listed company [This applies to the individual only.] (i) A business executor of a company whose external executive officers are mutually assigned [This (j) A business executor of a company to which a listed company donates products, services, or applies to the individual only.] money [This applies to the individual only.] (k) Other Relationship with the Company (2) Revised Name Supervisory Independent Supplementary Committee Director information Reason for appointment Audit & Member Tetsuro Higashi ○ – Tetsuro Higashi has been selected as an External Director because it is expected that he will contribute to strengthening the supervisory function of the Board of Directors and ensuring fair and transparent management by drawing on his wealth of knowledge, experience, and profound insights related to 10 (Translation) corporate management in his long career as a corporate manager. Furthermore, based on his attributes and relationship with NREH, we determined him as an Independent Director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders. Yoshio Mogi has great knowledge, experience and profound insights concerning corporate management acquired through his many years working as a corporate manager. He has been selected as an External Director as Audit & Supervisory Committee Member because it is expected that his extensive experience and knowledge will contribute to function of the Board of Directors and the corporate governance structure, as well as to enhancing the auditing structure. Furthermore, based on his attributes and relationship with NREH, we determined him as an Independent Director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders. Yoshio Mogi ○ ○ – strengthening the supervisory Akiko Miyakawa ○ ○ In the fiscal year Akiko Miyakawa has great ending March 2022, knowledge, experience and certain transactions profound insights as an expert at were conducted accounting and auditing acquired 11 (Translation) between the Company through her many years working and Deloitte Touche as a Certified Public Accountant. Tohmatsu LLC, She has been selected as an where Akiko External Director as Audit & Miyakawa served as Supervisory Committee Member Partner in the past. because it is expected that her Moreover, Akiko extensive experience and Miyakawa retired as knowledge will contribute to Partner of Deloitte strengthening the supervisory Touche Tohmatsu function of the Board of Directors LLC on May 31, and the corporate governance 2018, and thus, as of structure, as well as to enhancing the date of the auditing structure, although submission of this she has no previous experience report, more than directly involved in the three years have management of a company other elapsed since her than as an external officer. retirement. Furthermore, based on her attributes and relationship with NREH, we determined her as an Independent Director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders. Tetsu Takahashi has great knowledge, experience and profound insights as a legal expert acquired through his many years working as a lawyer. He has never in the past been involved in the as an outside director, however he has been selected as an External Director as Audit & Supervisory Committee Member because it is expected that his extensive experience and knowledge as a Tetsu Takahashi ○ ○ – management of a company except 12 (Translation) representative of a law firm and an outside director and outside audit & supervisory board member of other companies will contribute to strengthening the supervisory function of the Board of Directors and the corporate governance structure, as well as to enhancing the auditing structure. Furthermore, based on his attributes and relationship with NREH, we determined him as an Independent Director specified by the Tokyo Stock Exchange as there is no risk of conflict of interest with general shareholders. [Audit & Supervisory Committee] Committee Members and the Chairman Total Full-time Committee Committee Members Members Internal External Directors Directors Chairman Supervisory 5 2 2 3 Internal Director Audit & Committee Committee Presence of Directors and Employees who support the execution of duties by the Audit & Supervisory Present Matters regarding the Independence of the Relevant Directors and Employees from the Executive Directors The Company has established an Audit & Supervisory Committee Dept., to support the execution of duties by the Audit & Supervisory Committee, and full-time staff appointed to the department shall execute duties under the direction of Audit & Supervisory Committee Members. In addition, the 13 (Translation) Directors shall obtain the consent of the Audit & Supervisory Committee Members designated by the Audit & Supervisory Committee for personnel changes regarding the relevant full-time staff. 14 (Translation) Audit Dept. Cooperation among Audit & Supervisory Committee, Accounting Auditor, and Internal The Audit & Supervisory Committee carries out the following initiatives to achieve effective cooperation among the so-called three-way mutual auditing comprising the audits by the Audit & Supervisory Committee, audits by the Accounting Auditor, and audits by the Internal Audit Dept. The Audit & Supervisory Committee receives reports from the Group Internal Audit Dept. responsible for internal audits, and in addition to determining whether or not to give its approval, where necessary, it provides recommendations and instructions concerning changes to the audit plan, additional audits, and investigations, etc. In addition, the Audit & Supervisory Committee receives reports on the results and status of improvement of internal audits and the status of evaluation of internal controls related to financial reports. of opinions. The Audit & Supervisory Committee has the General Manager of the Group Internal Audit Dept. and the executive officer in charge of that department attend meetings to receive a report from the Accounting Auditor that provides an overview of the audit plan, quarterly review, end of year audit and internal control audit for financial reporting and promotes information sharing and the exchanging “Key Audit Matters” described in the audit report of the Accounting Auditor pursuant to the Financial Instruments and Exchange Act will reflect the discussions held between the Accounting Auditor and the Audit & Supervisory Board through the course of the fiscal year ended March 31, 2021 and the shared recognition of both parties. [Voluntary Committee] Establishment of voluntary committees which are equivalent to the nominating committee and Present compensation committee Situation of Establishment of Voluntary Committee, Composition of Committee Members and the Attribute of the Chairman Committee’s Name Committee Committee Other Chairman Total Full-time Members Members Internal External Outside Directors Directors Experts Voluntary committees Advisory which are equivalent Committee to the nominating Relating to committee Nominations and 15 4 0 1 3 0 0 External Director (Translation) Compensation Voluntary committees which are equivalent to compensation committee Advisory Committee Relating to Nominations and Compensation Supplementary Information 4 0 1 3 0 0 External Director The Company has set up an Advisory Committee Relating to Nominations and Compensation, which consists of a majority of independent external directors, as an advisory organization to strengthen the impartiality, objectivity and accountability of the functions of the Board of Directors in relation to decisions on director and executive officer nominations and compensation. At the committee meetings, matters relating to the nomination of and compensation for directors and executive officers, succession plans, and policies on training shall be discussed and the outcome of those discussions shall be reported to the Board of Directors. [Independent Directors] Number of Independent Directors Revised 4 persons Other Matters Related to Independent Directors All External Directors that qualify as Independent Directors have been designated as Independent Directors. [Incentives] Implementation of measures on incentive Adoption of performance-based stock allotment to Directors incentive plan and other measures Supplementary Information At the Ordinary General Meeting of Shareholders held on June 26, 2018, based on the policy to further clarify the link among directors’ compensation, performance, and shareholder value, in place of stock option system, the Company determined to introduce a performance-based stock incentive plan, etc. linked to mid-to long-term performance. The introduction of the Plan has gone through deliberation at the Advisory Committee Relating to Nominations and Compensation, for which the majority of committee members are independent external directors. For details, please refer to “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy 16 (Translation) Determining the Amount and Calculation of Compensation” of this report. Grantees of stock options – Supplementary Information [Compensation of Directors] Disclosure status (of individual compensation of Directors) Individual disclosure is limited for some. Supplementary Information Director’s compensation, etc. for Directors of the Company for the Fiscal Year ended March 2021 are as follows. (1) Total amount of compensation, etc., total amount of compensation by type and the number of directors applicable by director category Total amount Director category of Base compensation, compensation etc. (million yen) (million yen) Share-based compensation Bonus (Non-monetary compensation, (Performance-etc.) based incentive, etc.) (million yen) Performance-based compensation (million yen) performance-Non-based compensation (million yen) Number of directors applicable Supervisory 494 278 97 42 75 6 – Directors (Excluding Directors who also serve as Audit & Committee Members) (Excluding External Directors) 17 (Translation) Directors (Audit & Supervisory Committee Members) (Excluding External Directors) External Directors 102 102 – – – 2 76 76 – – – 6 a. The number of External Directors is five as of the end of the Fiscal Year ended March 2021. The reason for the difference with the number of directors applicable shown above is the inclusion of one Director who retired at the conclusion of the Ordinary General Meeting of Shareholders held on June 23, 2020. b. The compensation amount (“base compensation” and “bonus”) of Directors has been set as no greater than ¥550 million per year for Directors (excluding Directors as Audit & Supervisory Committee Members) according to a resolution at the Ordinary General Meeting of Shareholders held on June 26, 2018, and at the time of the resolution, the number of Directors (excluding Directors as Audit & Supervisory Committee Members) was eight (of which, two were External Directors). Furthermore, the compensation amount of Directors (Audit & Supervisory Committee Members) is limited to up to ¥170 million per year according to a resolution at the Ordinary General Meeting of Shareholders held on June 23, 2020. The number of Directors as Audit & Supervisory Committee Members at the time of the resolution was six (including four External Directors). The compensation amount of Directors is shown as the amount recorded by the Company as an expense during the fiscal year ended March 2021 regardless of whether it was paid during the fiscal year ended March 2021. c. Separately from the compensation amount of Directors shown in b. above, the Company introduced a performance-based stock incentive plan for Directors (excluding External Directors and Directors as Audit & Supervisory Committee Members) in accordance with a resolution approved at the Ordinary General Meeting of Shareholders held on June 26, 2018. Under the terms of the Plan, the Company’s contribution to a trust as compensation for Directors (excluding External Directors and Directors as Audit & Supervisory Committee Members) is limited to an amount of not more than ¥730 million over the relevant period of three fiscal years, and the number of Directors (excluding Directors as Audit & Supervisory Committee Members) who were subject to the Plan at the time of the resolution was six (excluding two External Directors). The amount paid as “share-based compensation, etc. (non-monetary compensation, etc.)” above includes performance-based stock incentive recorded as an expense for the fiscal year ended 18 (Translation) March 2021. Members)). d. The amount paid as “non-performance-based compensation” of “share-based compensation, etc. (non-monetary compensation, etc.)” above includes the compensation amount in the form of stock options recorded as an expense during the fiscal year ended March 2021 (¥870 thousand for five Directors (excluding External Directors and Directors as Audit & Supervisory Committee Compensation in the form of stock options is paid within the annual maximum amount of ¥650 million according to a resolution at the Ordinary General Meeting of Shareholders held on June 26, 2015, prior to the introduction of the compensation plans shown in b. and c. above, and the number of Directors (excluding Directors as Audit & Supervisory Committee Members) who were subject to the Plan at the time of the resolution was six, excluding two External Directors. The Company has determined to abolish the current stock options system and stop granting new stock options after granting stock options as compensation for Directors for the fiscal year ended March 2018. e. With respect to the performance-based compensation, the details of factors including the performance indicators that pertain to bonuses, which are monetary compensation, the calculation method of such bonuses and the reasons for selecting these indicators are as stated in the “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of this report. The actual results that pertain to performance indicators are as presented in the table below. Fiscal year ended March 31, 2019 Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021 Business profit ¥79,623 million ¥82,833 million ¥76,448 million Year-on-year change – +4.0% -7.7% f. With respect to the performance-based compensation, the details of factors including the performance indicators that pertain to share-based compensation, etc., the calculation method of such share-based compensation, etc. and the reasons for selecting these indicators are as stated in the “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of this report. The ranges of performance indicators were decided as presented in the tables below. 19 (Translation) ⇒ ⇒ The achievement-linked coefficient Business profit ROE (The ranges for the fiscal year ended March 2021, the third year from the start of the system in the fiscal year ended March 2019) 0% 200% Results 22.0% ¥75,400 million ¥105,600 million ¥76,448 million 6.5% 12.5% 7.4% (The ranges for the fiscal year ending March 2022, the third year from the start of the system in the fiscal year ended March 2020) Ranges Results The achievement-linked coefficient 0% 200% Business profit ¥70,800 million ¥99,200 million ROE 6.5% 12.5% (The ranges for the fiscal year ending March 2023, the third year from the start of the system in the fiscal year ended March 2021) Ranges Results The achievement-0% 200% linked coefficient ⇒ Business profit ¥66,600 million ¥93,400 million ROE 4.5% 10.5% – – – – – – g. Non-monetary compensation, etc. consists of the Company’s shares, etc. and the conditions, etc. for delivery are as stated in the “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of this report. h. As stated in the “II-1. Organization Structures and Organizational Operations [Compensation of Directors] Disclosure of Policy Determining the Amount and Calculation of Compensation” of this report, the decisions on the specific details concerning the amounts of base compensation and bonuses, both of which are monetary compensation, to be paid out are delegated to the President and Representative Director Eiji Kutsukake based on a resolution of the Board of Directors. Therefore, the President and Representative Director shall decide the details. The reason for this delegation to the President and Representative Director is that the Company has judged the President and Representative Director as appropriate to conduct the individual evaluation of each Director while considering, among other things, performance of the Company overall. The Ranges ~ ~ ~ ~ ~ ~ ~ ~ ~ 20 (Translation) payment level is deliberated by the Advisory Committee Relating to Nominations and Compensation for the appropriate exercise of the decision authority delegated to the President and Representative Director. (2) Total amount of consolidated compensation, etc. of those whose total amount of consolidated compensation, etc. is 100 million yen or more Name Director category Company category Total amount of compensation, etc. (million yen) Base compensation (million yen) Bonus (Performance-based incentive, etc.) (million yen) Share-based compensation (Non-monetary compensation, etc.) Performance-based compensation (million yen) Non-performance-based compensation (million yen) Eiji Kutsukake Seiichi Miyajima Director Director Filing company Filing company 133 110 64 57 33 28 20 10 15 13 * The payment amount in “Share-based compensation (Non-monetary compensation, etc.)” is the amount recorded as an expense for the Fiscal Year ended March 2021. The information given above is disclosed in the “Business Report” of the Notice of Convocation of Ordinary General Meeting of Shareholders and the “Corporate Governance” of the 2019 Securities Report. (Securities Report is available only in Japanese) Notice of Convocation of Ordinary General Meetings of Shareholders: https://www.nomura-re-hd.co.jp/english/ir/ir_library/generalMeeting.html Securities Report: https://www.nomura-re-hd.co.jp/ir/ir_library/securitiesreport.html Existence of a policy determining the amount and Yes calculation of compensation Disclosure of Policy Determining the Amount and Calculation of Compensation At a meeting of the Board of Directors, the Company resolved the policy for deciding the details of the compensation, etc. for each individual Director excluding Audit & Supervisory Committee Members. In addition, the Company established the Advisory Committee Relating to Nominations and Compensation, where the majority of members composing that body are Independent External Directors, and the Board of Directors resolved the operation, etc. of the compensation plan for the Directors, based on the deliberation by the committee and on the committee’s opinion reported to the Board of Directors. 21 (Translation) Furthermore, the Board of Directors has judged that the compensation, etc. for each individual Director in the Fiscal Year ended March 2021 is in line with this policy regarding decisions of compensation, etc. as it has confirmed that the method for deciding the details of compensation, etc. and the details of the compensation, etc. that were determined are consistent with this policy The details of the policy regarding decisions of the details of the compensation, etc. for each regarding decisions of compensation, etc. individual Director are as follows. A) Basic policy a) Compensation for Directors consists of a structure that is linked to the Mid- to Long-term Business Plan, etc. in order to sufficiently work as an incentive for the sustainable improvement of corporate value, and the Company’s basic policy in deciding compensation for each Director is to provide an appropriate level of compensation according to the role and position as a Director. b) Operation and revision of the compensation plan for Directors and the amount of the compensation for Directors are determined by the Board of Directors based on the deliberation by the Advisory Committee Relating to Nominations and Compensation and its opinion reported to the Board of Directors. c) In reviewing the appropriateness of the compensation level and the content of the share-based compensation plan, the Company takes consideration of factors such as the size of the Company and business characteristics, after obtaining advice from an external compensation consultant as necessary. d) Compensation of Directors concurrently serving as Executive Officers consists of “base compensation,” “bonus” and “share-based compensation” so that it works as a clear incentive to improve performance not only for the short-term, but also for the medium- to long-term. e) Compensation of the Chairman of the Board of Directors is made up of the “base compensation” and the “restricted shares (“RS”) portion of share-based compensation,” taking into account the sharing of interests with shareholders, since the Chairman of the Board of Directors is responsible for supervising execution of business from an objective standpoint and also for enhancing long-term corporate value. f) Compensation of Part-time Internal Directors and External Directors consists only of “base compensation” due to their role of supervising the business execution from an objective standpoint. B) Policy regarding decisions on the percentage of each type of compensation for each Director a) The composition ratio of each type of compensation for Directors concurrently serving as Executive Officers is decided based on b) and d) in A) above. b) The composition ratio of each type of compensation for the Director and Chairman of the Board 22 (Translation) [Reference] current system; of Directors is decided based on b) and e) in A) above. c) Compensation of Part-time Internal Directors and External Directors consists only of “base compensation” based on b) and f) in A) above. Standard compensation ratios for Directors concurrently serving as Executive Officers under the Fixed compensation : 50% (Base compensation) Variable compensation : 50% (Bonus: 25%, Share-based compensation: 25%) * The above ratios indicate a basic model when the Company pays 100% of its standard variable compensation amount. C) Policy regarding decisions on the amount of fixed compensation (base compensation) for each Director (including the policy regarding decisions on the timing and conditions for paying compensation) a) The amount of fixed compensation (base compensation) for each Director shall be determined according to the role and position as a Director. b) The fixed compensation (base compensation) shall be paid monthly. D) Policy regarding decisions on the details of variable compensation (bonus and share-based compensation) for each Director and the calculation method for the monetary amount or number of shares (including the policy regarding decisions on the timing and conditions for paying compensation) a) The amount of bonus is determined according to the Company’s business performance, such as consolidated business profit, and evaluation of individuals. b) The evaluation of individuals evaluates the progress of initiatives for single-year and the medium- to long-term, for which achievements are difficult to measure based only on the figures of financial results. c) It shall be paid at a certain time after the end of each fiscal year. a) The performance-based compensation adopts performance-sharing (“PS”) providing incentive for enhancement of medium- to long-term performance, and implements, after three years of the commencement of each business year, delivery or payment (“delivery, etc.”) of the Company’s shares and/or an amount equivalent to the proceeds of converting the Company’s shares into cash (the “Company Shares, etc.”). b) The non-performance-based compensation adopts restricted shares (“RS”) providing an incentive 23 (Translation) for long-term contributions and enhancement of corporate value to delay delivery, etc. until retirement as an officer. c) The share-based compensation adopts the system of executive compensation BIP (Board Incentive Plan) trust (the “Trust”). The Company Shares, etc. to be delivered, etc. is set at one Company’s share per one point, according to the number of points calculated based on the below formula. ・PS portion [Calculation formula of points] The number of points (the “Number of PS Points”) to be granted to Directors for each fiscal year during the covered period is calculated by dividing the amount of pre-determined base compensation with respect to each executive position by the share price as of the acquisition of the Company’s shares by the Trust. The number of achievement-linked points shall be calculated by multiplying the Number of PS Points granted for each fiscal year by the achievement-linked coefficient determined based on the level of performance three years after the beginning of the applicable fiscal year. For the achievement-linked coefficient, the target ranges (0-200%) are set based on the “business profit” from the viewpoint of profit growth, and return on equity (ROE) from the viewpoint of maintaining the capital efficiency, out of the management benchmarks listed in the Mid- to Long-term Business Plan. ・RS portion The number of points (the “Number of RS Points”) to be granted to Directors and added for each fiscal year during the covered period is calculated by dividing the amount of pre-determined base compensation with respect to each executive position by the share price as of the acquisition of the Company’s shares by the Trust. E) Matters regarding the method for determining the details of compensation for each Director a) The determination of the specific details of the amount of base compensation and bonuses, both of which are monetary compensations, to be paid out is delegated to the President and Representative Director based on a resolution of the Board of Directors. b) The payment level shall be deliberated by the Advisory Committee Relating to Nominations and Compensation for the appropriate exercise of the authority stated in a) above by the President and Representative Director. F) Other important matters relating to compensation for each Director Regarding share-based compensation, the Company formulated “share delivery regulation” to handle repayment claims at an amount equivalent to the Company Shares, etc. to be delivered, etc. in the event that specific circumstances (improper conduct, etc.) occur. 24 (Translation) [Support System for External Directors] The Corporate Planning Dept. provides explanations and information required for the support of External Directors (excluding Directors who also serve as Audit & Supervisory Committee Members). In addition, the Company has established an Audit & Supervisory Committee Dept., and has appointed full-time staff to support the execution of duties by the Audit & Supervisory Committee. [Status of individuals that have retired from positions such as President] Information including the names of counselors, advisors, etc., who previously held positions such as President Name Description of Business Title and Position Form and Conditions of Employment (Full-time, Part-time, Paid or Unpaid, etc.) Date of Retirement Term as President – – – – – – Total number of counselors, advisors, etc., who previously held positions such as – President Other Matters The senior advisor system for the Nomura Real Estate Group is provided below. [Overview of the Senior Advisor System] ・ Applicable to: Individuals with officer experience (Director, Executive Officer or Audit & Supervisory Board Member) ・ Selection Method: By resolution of the Board of Directors ・ Description of Business: 1. Providing advice regarding management and business and 2. Carrying out activities related to economic organizations, social contribution activities, etc. They will not participate in any management decision-making. 2. Matters Related to Functions of Execution of Duties, Audit and Supervision, Appointment and Decisions regarding Compensation, etc. (Outline of the Current Corporate Governance System) Revised 1. Overview of Corporate Governance (1) Board of Directors The Board of Directors bears the responsibility of realizing effective corporate governance for all shareholders, and through this, achieving sustainable growth of the Company and working to 25 (Translation) maximize long-term corporate value. To fulfill this responsibility, the role of the Board of Directors is to ensure the fairness and transparency of management by fully supervising management, and make the best decisions for the Company through important business execution decisions, etc. The Company’s Board of Directors comprises six Directors (excluding Directors who serve as Audit & Supervisory Committee Members) (of which one is External Director) and five Directors who serve as Audit & Supervisory Committee Members (of which three are External Directors). The Company elects diverse Directors with various knowledge, experience and skills in order to ensure the necessary balance and diversity as a holding company that manages companies that conduct business in various areas. In order to strengthen the supervisory function of the Board of Directors and realize highly fair and transparent management, four out of the 11 Directors are Independent External Directors. The Board of Directors Members of the Company are as follows. Chairman: Shoichi Nagamatsu (Director) Members: Shoichi Nagamatsu (Director), Eiji Kutsukake (President and Representative Director), Daisaku Matsuo (Executive Vice President and Representative Director), Makoto Haga (Director), Hiroshi Kurokawa (Director), Tetsuro Higashi (Independent External Director), Hiroyuki Kimura (Director and Audit & Supervisory Committee Member), Yasushi Takayama (Director and Audit & Supervisory Committee Member), Yoshio Mogi (Independent External Director and Audit & Supervisory Committee Member), Akiko Miyakawa (Independent External Director and Audit & Supervisory Committee Member) and Tetsu Takahashi (Independent External Director and Audit & Supervisory Committee Member) (2) Audit & Supervisory Committee The Company has adopted an Audit & Supervisory Committee governance structure. The majority of Audit & Supervisory Committee membership is comprised of Independent External Directors; and the committee monitors business management and performs audits utilizing the Company’s internal control system. We have developed a system through which the Audit & Supervisory Committee receives periodic reports on internal audits and results from the Internal Audit Dept., and has the authority to ask Directors, Executive Officers, and Operating Divisions of the Company and the Group Companies to report such matters when necessary. Audit & Supervisory Committee Members can attend the Company’s important meetings, including those of the Management Committee, gather information on the business execution and express their opinions so that an effective system for audits and supervision is secured. The Audit & Supervisory Committee Members of the Company are as follows. Chairman: Hiroyuki Kimura (Full-time) Members: Hiroyuki Kimura (Full-time), Yasushi Takayama (Full-time), Yoshio Mogi (Independent 26 (Translation) External Director), Akiko Miyakawa (Independent External Director) and Tetsu Takahashi (Independent External Director) (3) Advisory Committee Relating to Nominations and Compensation The Company has set up an Advisory Committee Relating to Nominations and Compensation, the majority of which are independent external directors, as an advisory organization to strengthen the impartiality, objectivity and accountability of the functions of the board of directors in relation to decisions on director and executive officer nominations and compensation. The committee will discuss matters relating to the nomination of and compensation for directors and executive officers, successor plan, policy for training, etc. and shall report the outcome of discussions to the Board of Directors. The Members of the Advisory Committee Relating to Nominations and Compensation of the Company are as follows. Chairman: Tetsuro Higashi (Independent External Director) Members: Tetsuro Higashi (Independent External Director), Shoichi Nagamatsu (Director and Chairman of the Board of Directors), Yoshio Mogi (Independent External Director and Audit & Supervisory Committee Member) and Tetsu Takahashi (Independent External Director and Audit & Supervisory Committee Member) (4) Management Committee The Company has introduced a system of executive officers with an aim to strengthen Group management, to separate and enhance the business execution function from the decision-making and supervisory functions. Each executive officer appointed by the Board of Directors is delegated management authority based on the Company’s internal rules and other stipulations to execute business under the direction of the president & representative director and policies approved by the Board of Directors of the Company. The Management Committee, which is comprised of the Chief Executive Officer, Executive Vice President and Executive Officers, determines certain matters regarding the execution of business at overall group companies. Director and Chairman of the Board of Directors and Directors who are Audit & Supervisory Committee Members attend meetings of the Committee, where they express their opinions as necessary. (5) Other Committees Under the Management Committee, there are the following committees that discuss the Group’s management policies, issues to be coped with, etc. [Budget Committee] For the compilation of budgets, preparation of medium-term business plans and other matters, the Committee discusses the planning, exercise and other matters regarding budgets and medium-term 27 (Translation) business plans. [Risk Management Committee] With the aim of securing the continuity and stable development of business through the exercise of risk management, the Committee discusses matters in connection with internal controls, risks in the Group’s management and other matters. [Sustainability Committee] The Committee discusses matters on the promotion of sustainability and others for the purpose of establishing policies and plans and managing results regarding the promotion of sustainability, deepening Group employees’ understanding and disclosing various information thereof. [DX Strategy Committee] The Committee discusses matters on DX strategy and investment plans for preparing the ICT base and establishing information systems with the aim of establishing policies and plans regarding the promotion of DX and improving the ICT environment and its effective use. [Wellness and D&I Management Committee] The Committee discusses mid- to long-term goals and various measures related to promoting wellness, work style reforms, promoting the empowerment of women, and utilization and active participation of the Group’s diverse human resources in order to maintain and improve sound, comfortable workplace environments in which people can work with vigor and achieve wellness, and also to enhance efforts for formulating human resource development policies and promoting internal environment development for ensuring diversity. 2. Internal Audit System and Status of Audits by Audit & Supervisory Committee (1) Internal Audit System The Nomura Real Estate Group has established an internal audit department at each group company, with the exception of some small companies. Each department is supervised under the direct jurisdiction of the Group company president or an officer who does not hold an additional office in a business operations division, which allows the department to maintain organizational independence. In addition, we have established the Group Internal Audit Dept. in the Company that, in collaboration with the Accounting Auditor, supervises, monitors and evaluates the internal audit functions of the entire Group as well as auditing in each division within the Company. Also, a system is in place to report results of audits to the Board of Directors and the Audit & Supervisory Committee. (2) Status of Audits by Audit & Supervisory Committee a. Structure and operations of Audit & Supervisory Committee The Audit & Supervisory Committee is comprised of five members, two Audit & Supervisory Committee Members (full-time) and three Audit & Supervisory Committee Members 28 (Translation) (Independent External Directors). Of the Audit & Supervisory Committee Members (full-time), one Member was newly elected at the 17th Ordinary General Meeting of Shareholders of the Company, held on June 24, 2021. The two full-time Members were elected to strengthen the effectiveness of audit and supervision functions through the collection of information from Directors (excluding Directors who are Audit & Supervisory Committee Members), Executive Officers, employees, etc., attendance at important meetings and close cooperation with the Internal Audit Dept. The Audit & Supervisory Committee holds regular meetings prior to monthly Board of Directors meetings with all Members attending the meetings. It also holds irregular meetings as necessary. During the fiscal year ended March 2021, the Committee held 14 meetings. Each of the monthly meetings took approximately three hours. After receiving audit reports from the Internal Audit Dept., reports on important meetings, including those of the Management Committee, from the full-time Audit & Supervisory Committee Members and quarterly financial reports from the Finance & Accounting Dept., the Members of the Audit & Supervisory Committee, among other activities, exchanged opinions with Group CFO, Executive Officer and Supervisor of Management Division on a regular basis and confirmed what was discussed at meetings of the Advisory Committee Relating to Nominations and Compensation. The Company also adopts measures to enhance the effectiveness of audits, having established an Audit & Supervisory Committee Dept. to support the execution of duties by the Audit & Supervisory Committee and appointed full-time staff dedicated to the department. [Hiroyuki Kimura, Audit & Supervisory Committee Member (Full-time)] Attendance rate at Audit & Supervisory Committee meetings in the fiscal year ended March 2021 : (appointed on June 24, 2021) Career history: Hiroyuki Kimura has extensive experience in the Group, primarily in finance and accounting, and is well versed in its business, as well as having a considerable degree of knowledge concerning finance and accounting. [Yasushi Takayama, Audit & Supervisory Committee Member (Full-time)] Attendance rate at Audit & Supervisory Committee meetings in the fiscal year ended March 2021: 100% (14/14) Career history: Yasushi Takayama has a considerable degree of knowledge concerning legal affairs, finance and accounting as well as overseas business due to his extensive business experience, primarily in legal affairs and finance, in the Nomura Group in Japan and overseas. [Yoshio Mogi, Audit & Supervisory Committee Member (External/Independent)] Attendance rate at Audit & Supervisory Committee meetings in the fiscal year ended March 2021: 100% (14/14) 29 (Translation) Career history: Yoshio Mogi has great knowledge, experience and profound insights concerning global corporate management acquired through his many years working as a corporate manager for a general trading company. In addition, he has a considerable degree of knowledge concerning finance and accounting acquired through serving as CFO at the aforementioned company. [Akiko Miyakawa, Audit & Supervisory Committee Member (External/Independent)] Attendance rate at Audit & Supervisory Committee meetings in the fiscal year ended March 2021: 100% (14/14) Career history: Akiko Miyakawa has great knowledge, experience and profound insights as an exp