To achieve the sustainable growth of the NISSIN FOODS Group and enhancement of its corporate value over the medium to long term, the Company annually confirms whether the board of directors is fulfilling its role and evaluates its effectiveness with the aim of enhancing the Board’s effectiveness. The evaluation method is determined based on deliberations in the Management Advisory Committee and the board of directors. In FY 3/2023, we conducted a third-party assessment via questionnaire and interview.
The results of the FY 3/2023 assessment confirmed that the board of directors' operational effectiveness is appropriately maintained in all respects. The assessment details are outlined below.

In 2015, the Company established the Management Advisory Committee, which is chaired by an independent outside director and with a majority of members as independent officers, in order to strengthen the supervisory functions of the board of directors and at the same time ensure transparency and fairness in management. The Management Advisory Committee, an advisory body to the board of directors, meets three times a year in principle to deliberate on the following agenda items, and contributes to board of directors discussions by reporting the results of these deliberations to the board.

Furthermore, the board of directors must consult with the Management Advisory Committee prior to deliberating and passing resolutions on the above matters. The board of directors also respects and gives due consideration to reports from the Management Advisory Committee in deliberating and passing resolutions on these matters.

To develop perpetually as an EARTH FOOD CREATOR, constantly creating new food while solving environmental and social issues, the Group must strategically groom corporate managers who set forth a medium- and long-term mission and realize and execute the corporate philosophy.
In selecting a successor to the CEO, the board of directors shall, in principle, select a candidate from among those who have been elected as directors or executive officers. In addition to past achievements, this candidate shall have a strong sense of ownership and responsibility for realizing the Group's vision. He or she shall also be well-respected both inside and outside the Company because of his or her decisiveness, ability to move events forward, ability to shape and inspire people, high moral character, and sense of justice. The board of directors selects candidates who have a broad range of experience and knowledge in management, but also have an enterprising spirit toward advanced insights and a high level of management decision-making ability. After consultation with the Management Advisory Committee, the board of directors decides whether the relevant person is suitable as a successor.
In grooming successors to key positions, like directors, executive officers, presidents of operating companies, and chief officers, we are striving to fill the pipeline in a systematic manner by implementing the PDCA (Plan-Do-Check-Act) cycle, which involves the formulation of development plans, interviews with the CEO, execution of plans, and checking of progress.

The Company established standards for setting director remuneration, stipulating the level of remuneration for each position and role, performance indicators, and the impact of these factors on remuneration, etc.

The criteria for director remuneration is intended to enhance the medium-and long-term corporate value of the company and to motivate and raise the morale of directors to contribute to improved company performance. The Management Advisory Committee, an advisory body to the board of directors consisting of a majority of independent outside directors (as of November 2021, the committee has been composed of a majority of independent outside directors), deliberates and approves remuneration details, which are then confirmed by the board of directors.The Company delegated Koki Ando, President & Representative Director and CEO, the authority to determine certain portions of individual director remuneration. This structure determines the details of basic remuneration of directors in accordance with said established standards and ensures the appropriate exercise of authority in this regard in accordance with the details of the standards for director remuneration discussed and approved by the Management Advisory Committee. The Company determined that the best way to evaluate individual directors from the perspective contribution to overall Company business and performance is to delegate this authority to representative directors.

The monthly provision of basic remuneration consists of a fixed remuneration based on the position and the role of each director and a performance-linked remuneration that is linked to the Company's business performance and the degree of the director's individual performance during the fiscal year under review. Performance-linked remuneration represents as much as 20% of the base amount relative to the actual results for the Company's consolidated performance indicators and individual performance evaluation indicators, or a total of as much as 40% for both indicators combined. This amount is reflected in the performance-linked remuneration of the basic remuneration for the following fiscal year. Outside directors and members of the Audit & Supervisory Board receive only fixed basic remuneration.

The following indicators are linked to consolidated performance, selected from the viewpoints of ease of understanding and contribution to short-term earnings growth.

To evaluate individual performance, the Company clarifies the individual responsibility and performance for each director and evaluates their degree of accomplishment towards plans and compared with the previous fiscal year, based on the belief that the individual performance accomplished through business execution is tied to the business performance of the Company. Individual performance evaluations are made based on indicators covering business performance of all Group companies, respective business divisions in charge, and respective operating companies in charge. The percentage weights of these indicators used in the evaluation differ, depending on the position of each individual.

Performance-linked stock remuneration links the value of Company shares with director remuneration, creating shared interests with shareholders. In this way, the Company believes we will enhance the medium-to long-term corporate value, motivate directors, and raise their morale to contribute to the improvement of Company business performance. Under this plan, Company shares are acquired through a trust ("Trust") using money contributed by the Company as the source of funds. Company directors (excluding outside directors) are granted shares of Company common stock through the Trust according to Officer Share Grant Rules established by the Company.

Based on Officer Share Grant Rules, each director is given a number of provisional points determined by title. These provisional points are adjusted according to the degree of achievement, etc., underperformance evaluations for every three-year performance evaluation period, the measurement of which begins with each fiscal year. After adjustments, said provisional points become finalized points. Upon retirement or death and according to the procedures determined under the Officer Share Grant Rules, eligible directors will be granted one Company share per finalized point from the Trust according to the number of finalized points said director has accumulated to that point. (If the conditions stated in the Officer Share Grant Rules have been met, a certain ratio of Company shares may be paid in cash equivalent to the market value of Company shares, rather than in the form of Company shares.)

From the viewpoint of medium-to long-term growth and returning profits to shareholders, the Company will use the three-year average of multiple indicators selected by the Management Advisory Committee as deemed appropriate for the purpose of this plan. Indicators include core operating profit growth rate for existing businesses, and relative TSR as indicators linked to consolidated business performance. We selected the following indicators for the three-year performance evaluation period beginning FY 3/2023.

At the 74th Ordinary General Meeting of Shareholders held June 28, 2022, the Company resolved that Company directors (excluding outside directors) will be subject to a performance-linked share-based remuneration system and, at the same time, that the Company will abolish the performance-linked remuneration system and the associated performance-linked remuneration-type stock option framework. It was further resolved that no new stock acquisition rights will be granted to Company directors (excluding outside directors) as remuneration for the execution of duties as of the end of the general meeting of shareholders in question.

At the time we published our FY 3/2021 financial results on May 11, 2021, we announced our policy to sell an additional ¥10 billion over the following two years. Subsequently, we sold a total of ¥11.363 billion based on market value, achieving the goal of this policy by the end of FY 3/2022. As of the end of FY 3/2016, immediately following the Tokyo Stock Exchange's establishment of its Corporate Governance Code on June 1, 2016, we saw a strategic cross-shareholdings balance of ¥92.496 billion. As a result of efforts to reduce strategic cross-shareholdings, the balance as of FY 3/2023 was 9.4% of total equity as of FY 3/2023 (¥467.949 billion). Excluding strategic cross-shareholdings of overseas companies, the amount becomes equivalent to 8.5% of shareholders’ equity. The number of companies in which we engaged in strategic cross-shareholdings as of FY 3/2023 was 57.

NISSIN FOODS CO., LTD. (listed on the Main Board of the Hong Kong Exchanges and Clearing; hereinafter referred to as “Hong Kong Nissin”) and KOIKE-YA Inc. (hereinafter referred to as “KOIKE-YA”) are listed subsidiaries of the Company.
Since Hong Kong Nissin and KOIKE-YA are listed subsidiaries, the Company respects the independence of the listed subsidiaries based on the understanding that properly protecting the interests of the listed subsidiaries and their shareholders and stakeholders other than the Company will contribute to increasing the corporate value of the subsidiaries.
Based on the policy above, the Company intends to maximize the corporate value of the group by establishing a group governance system that includes publicly traded subsidiaries. This governance system will reflect the Basic Policy on the Construction of Internal Control Systems and other policies established by the Company, even as we ensure the independence of management among the publicly listed subsidiaries.

In accordance with the philosophy of our founder's spirit of
Shoku-i Sei-shoku (Food-related jobs are a sacred profession), the NISSIN FOODS Group provides safe and worry-free food products, promotes business to maximize benefits to all stakeholders, and recognizes the enhancement and strengthening of corporate governance as one of the most important management priorities in order to practice highly objective and transparent management.
In the area of tax compliance, we have also established the NISSIN FOODS Group Tax Policy, promote stronger tax compliance awareness among NISSIN FOODS Group companies and employees, and constantly strive to develop and operate an appropriate tax compliance system.