Initiatives to Strengthen Corporate Governance

We position the development and promotion of the corporate governance system as one of the most important management issues, and we are continuously working on it.

The Company positions the development and promotion of the corporate governance system as one of the most important management issues, and implements ongoing initiatives to strengthen corporate governance.

Changes in Corporate Governance
Evaluation of the effectiveness of Board of Directors

The Evolution of Mitsubishi Estate’s Corporate Governance System
Evaluation of the Effectiveness of the Board of Directors

Changes in corporate governance

The Evolution of Mitsubishi Estate’s Corporate Governance System

We position the development and promotion of a corporate governance system as one of the most important management issues.
Since the transition to a company with three Nominating Committee in 2016, we have worked to clarify the roles and strengthen the functions of management oversight and business execution, and to ensure accountability to shareholders and other stakeholders. We have made steady progress in improving our corporate governance system, taking into account changes in social conditions and the business environment surrounding companies, requests from stakeholders, and other factors.

In fiscal 2024, we announced the "Long-Term Business Plan 2030 Review," and revised our approach to achieving our goals, taking into account various changes in the environment and the progress of each business since the plan was formulated. As part of this, we updated our shareholder return policy ((1) introducing a progressive dividend of +3 yen per year in principle (until fiscal 2030), and (2) continuous and flexible treasury shares buybacks), and under this policy we have carried out treasury shares buybacks worth approximately 50 billion yen.

The following is an overview of the changes in our corporate governance structure to date.

Mitsubishi Estate has positioned the development and promotion of its corporate governance system as one of its most important management issues.

Since transitioning to a Company with Nominating Committee, etc., in 2016, the Company's basic policy has been to “develop and promote its corporate governance system to bring about greater clarity with regard to roles and the strengthening of functions in both management supervision and business execution, while also working to ensure the transparency and objectivity of management in order to fulfill its obligation to be accountable to its shareholders and other stakeholders.” To this end, the Company has steadily promoted the improvement of its corporate governance system, giving due consideration to changes in social conditions and the business environment as well as to the demands of its stakeholders.

In FY2024, Mitsubishi Estate unveiled Long-Term Management Plan 2030 Review, which took into account numerous changes in the business environment and the progress of various businesses since the initial formulation of the plan to revise its approach toward achieving the plan’s targets. As part of this revision, the Company updated its shareholder return policy, introducing a progressive dividend policy of increasing the dividend by ¥3 per share every fiscal year, in principle, until FY2030, and conducting continuous and flexible share buybacks. Under this policy, the Company completed share buybacks of approximately ¥50.0 billion.

The following is an overview of the changes made to Mitsubishi Estate's corporate governance system to date.

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Evolution of Corporate Governance System

Effectiveness evaluation of the Board of Directors

Evaluation of the Effectiveness of the Board of Directors

Purpose of evaluating the effectiveness Board of Directors

Purpose of Evaluating the Effectiveness of the Board of Directors

The Board of Directors meet once a year based on the evaluation by each Director for the purpose of confirming whether the Board of Directors Directors is functioning effectively through its supervisory functions in order to improve corporate value and improve corporate governance over the medium to long term. , analyzes and evaluates the effectiveness of the entire Board of Directors, discloses a summary of the results, and formulates and implements measures to improve effectiveness as necessary.

With the aim of confirming that the Board of Directors is functioning effectively through its oversight function to improve corporate value on a medium- to long-term basis and to enhance corporate governance, the Board of Directors analyses and evaluates its effectiveness as a whole based on evaluations conducted annually by each director. In addition, the Board discloses a summary of the evaluation results and subsequently formulates and implements policies based thereon to enhance its effectiveness where necessary.

Initiatives taken to date to achieve the role of Board of Directors

Initiatives Undertaken Thus Far to Realize the Desired Role of the Board of Directors

In June 2016, the Company transitioned to a company with Nominating Committee etc., and from the perspective of clarifying the respective roles of management supervision and business execution and strengthening their functions, the main role of the Board of Directors is to implement basic management policy and important business execution. Decisions and oversight of the execution of duties by Director and executive officers. Up until now, based on the analysis results of the annual effectiveness evaluation, we have scrutinized the agenda and enhanced discussions on the management plan, enhanced the opportunities and content of reports from executive officers, and enhanced the provision of information to outside Director. , has taken steps to properly fulfill its role.

Starting from FY2020, in light of the "Long-term Management Plan 2030" formulated and announced in January 2020, in order to appropriately monitor management aimed at increasing shareholder value and social value from a long-term perspective, items related to initiatives that should be enhanced in the future have been added to the existing evaluation items. Furthermore, advice has been obtained from a third-party evaluation agency in FY2020 and FY2023 for each phase, such as creating questionnaires, analyzing responses, and sharing issues. The process and results of the evaluation of the effectiveness of Board of Directors that was conducted are outlined below.

Mitsubishi Estate transitioned to a company with nominating committee, etc., structure in June 2016. The Company defines the primary duties of the Board of Directors as deciding on basic management policies and important matters of business execution as well as supervising the execution of duties by directors and corporate executive officers from the perspective of bringing about greater clarity with regard to roles and the strengthening of functions in both management supervision and business execution. In accordance with the results of the analysis of the annual evaluation of the Board of Directors’ effectiveness, the Board has thus far implemented initiatives to enable it to carry out its role appropriately. These include enhancing discussions regarding management plans by carefully examining agenda items as well as increasing opportunities for and improving the content of reporting from corporate executive officers, in addition to ensuring that information is provided more extensively to outside directors.

In FY2020, based on Long-Term Management Plan 2030—unveiled in January 2020—the Company began including items regarding initiatives to be improved going forward in addition to existing items from the perspective of appropriately monitoring management to increase social value and shareholder value over the long term. Furthermore, in FY2020 and FY2023, the Company consulted with a third-party evaluation organization at each phase of the evaluation process, which involved the creation of questionnaires, an analysis of the questionnaires’ responses, and the sharing of recognized issues to be addressed. An overview of the evaluation process and results of the third-party evaluation conducted on the effectiveness of the Board of Directors are as follows.

1Evaluation process

1Process of Evaluation

(1) Evaluation method

(1) Method of Evaluation

All Board of Directors conduct self-evaluations by answering questionnaires regarding the composition, operation, effectiveness, etc. of the Board of Director and the Nomination, Audit, and Remuneration Board of Directors. We examined countermeasures, etc.

All directors conducted self-evaluations in the form of a response to a questionnaire related to the composition, operation, effectiveness, etc., of the Board of Directors and each of the Nominating, Audit, and Remuneration committees. Taking these results into consideration, directors discussed the issues with each other and examined proposed corrective measures at a meeting of the Board of Directors.

Step 1: Conducted a questionnaire for all Director; Issuance of a questionnaire to all directors

Step2: Discuss results at Board of Directors; Discussion at a meeting of the Board of Directors in light of the evaluation results

Step3: Start of initiatives based on decision; Launch of initiatives based on the Board's approval

(2) Evaluation items

(2) Items of Evaluation

As evaluation items based on the "Long-Term Management Plan 2030," we confirm "Diversity to fulfill monitoring and management supervision functions" as the role and structure of Board of Directors, the effectiveness of Board of Directors, and "Themes to be discussed further for monitoring and how the status of business execution should be reported by Executive Officers" as the operation of Board of Directors. The following is a list of the topics that are to be discussed and reported by the Executive Officers.

In terms of evaluation items based on Long-Term Management Plan 2030, the Company has confirmed “diversity for fulfilling the oversight function of the Board of Directors” as part of the evaluation of the Board’s role and composition and “topics to be fleshed out in future discussions for monitoring and the nature of reports on the status of business execution from corporate executive officers” as part of the evaluation of the Board’s effectiveness and operation.

Board of Directors Roles and Composition	Roles of Board of Directors, ratio of outside Director, number of directors, diversity, skills
of the Board of Directors Effectiveness	Management planning, business execution (including business risks), internal control risk management, sustainability, dialogue with shareholders and investors and information disclosure, operation of the nomination, audit and Remuneration committees, etc.
of the Board of Directors operation	Meeting method, meeting frequency/required time, execution status report by Executive Officers, provision of information outside of Board of Directors, Q&A, training, etc.
other	Methods of evaluating the effectiveness of the Board of Directors etc.

Role and Composition of the Board of Directors	Role of the Board of Directors, proportion of outside directors, membership size, diversity, and skills
Effectiveness of the Board of Directors	Management planning, business execution (including business risk assessment), internal control and risk management, sustainability, dialogue with and information disclosure to shareholders and investors, operation of the Nominating, Audit, and Remuneration committees, etc.
Operation of the Board of Directors	Method and frequency of meetings, required time, report on status of business execution of corporate executive officers, provision of information outside of Board of Directors’ meetings, questions and answers, training, etc.
Others	Method of the evaluation of the effectiveness of the Board of Directors, etc.

2Evaluation results and future actions

2Results of Evaluation and Future Initiatives

(Evaluation result)

The Board of Directors was evaluated as "functioning effectively."

(Results of Evaluation)

The evaluation confirmed that the Board of Directors was functioning effectively.

(result of analysis)

In the questionnaire for each Director to evaluate the effectiveness of the company, suggestions were given regarding business plans that take into account the rapidly changing business environment, appropriate monitoring methods, and proposals for further invigorating discussions. However, a high percentage of directors answered that the majority of the items were "appropriate."
With regard to each evaluation item, Director constructively exchanged opinions, pointing out issues and offering suggestions for the future. In particular, there was a strong awareness of issues regarding the content of reports related to the status of business execution by executive officers, themes that require increased monitoring intensity, and management that encourages lively discussions in order to appropriately monitor the long-term business plan.
In addition, the members reviewed useful suggestions made at Board of Directors and mutually confirmed comments made by Director that would enhance the effectiveness of management oversight.

(Analysis of Results)

Despite proposals on the need for business plans to reflect rapid changes in the business environment, the ideal approach to monitoring, and ways to further invigorate discussions, a high proportion of respondents rated the majority of items as appropriate in the questionnaire on the evaluation of Board effectiveness completed by each director.
The meeting saw constructive discussions on each evaluation item, including issues pointed out by directors and suggestions for the future. In particular, there was a strong recognition of the challenges inherent in conducting appropriate monitoring of the long-term management plan, including the content of reports on the status of business execution by corporate executive officers, themes that require stronger monitoring, and operation of the Board of Directors to ensure lively discussions.
The meeting also verified statements by directors that were intended to enhance the effectiveness of management supervision, including by reviewing helpful suggestions at meetings of the Board of Directors.

（1）前回の評価から改善した主な事項

(1) Main Items Improved Since the Previous Evaluation

2024年3月期実効性評価における、更なる実効性向上に向けた主な課題と今後の対応

地政学リスクや物価変動等、経営環境の変化に対応した経営戦略の実行状況の監督を深化すべく、社外取締役の更なる知見活用を可能にする情報提供方法、モニタリングの手法、取締役会で議論すべき論点等について、現状の改善に向けて、改めて検討・整理すること。
取締役会の更なる実効性向上に向けた取締役会の構成と多様性について継続検討すること。

Major Tasks for Further Enhancing Board Effectiveness Since the FY2023 Effectiveness Evaluation and Future Initiatives

Reexamine and revise ways to improve the current provision of information, monitoring methods, and points at issue to be discussed at meetings of the Board of Directors to enable it to further utilize the expertise of outside directors in order to facilitate closer oversight of the execution of management strategies in response to changes in the business environment, such as geopolitical risks and price fluctuations.
Continuously examine the composition and diversity of the Board of Directors to further improve its effectiveness.

2024年度の対応

FY2024 Initiatives

モニタリングの実効性を高めるため、株主価値向上戦略における事業戦略の執行状況について、事業担当役員及びコーポレート担当役員双方から報告することで、議論を深めるための情報提供を行ったこと。
取締役会として備えるべきスキルについての議論を行ったうえで、スキル自体の見直しは行わないものの、スキル選定理由の明文化と開示を行うこととしたこと。
Ensured the provision of information to deepen discussions by having both executive officers in charge of businesses and corporate officers report on the progress of business strategies stipulated in the strategies for increasing shareholder value to enhance the effectiveness of monitoring.
Without revising the skills requirement, stipulated and disclosed the rationale for their inclusion in the skills matrix after discussing the skills required for membership on the Board of Directors.

（2）更なる実効性向上に向けた主な課題と今後の対応

(2) Main Issues and Future Initiatives Aimed at Further Improvements in Board Effectiveness

取締役会における検討・議論の結果、以下の点が確認されました。

目まぐるしく変化する経営環境に対応した経営戦略・事業計画の実行状況の監督を深化すべく、既存のフレームに捉われない実効性のあるモニタリングのあり方を検討・整理すること。
経営環境変化に応じた最適なスキルをはじめとする取締役会構成と多様性について継続検討すること。

Examinations and discussions at meetings of the Board of Directors identified the following points.

The Board of Directors must examine and identify the ideal approach to effective monitoring that transcends existing frameworks to enable it to closely oversee management strategies and business plans that reflect rapid changes in the business environment.
Continually examine the composition and diversity of the Board of Directors, including to ensure that its members have the optimal skills matched to changes in the business environment.

Initiatives to Strengthen Corporate Governance