Evaluation of the Board of Directors’ Effectiveness

Basic ideas and policies

The Resonac Group aims to achieve sustainable corporate growth and to increase its medium- to long-term corporate value. To this end, as its responsibility and role, the Board of Directors is expected to build a system to make decisions in a transparent, fair, prompt, and resolute manner and to supervise the management of the system. The Company issues a questionnaire survey to directors and Audit & Supervisory Board members to evaluate the effectiveness of the Board of Directors as a whole and whether it has fulfilled that responsibility and role. Based on the survey results, issues to be resolved are discussed by the Board of Directors.

Results for 2021(former Showa Denko)

Evaluation Method

Regarding the effectiveness of the Board of Directors in 2021, we conducted a survey in December 2021 in which the directors and Audit & Supervisory Board members answered questions and made free comments. Then, in March 2021, the Board of Directors held a meeting for all directors and Audit & Supervisory Board members to discuss the collected self-evaluation results, create a summary of the evaluation results for fiscal 2021, and formulate an action plan for fiscal 2022. To ensure the objectivity of the survey and further boost the effectiveness of the Board of Directors, the survey is conducted and the results are tabulated by an external organization.

Evaluation Results

The evaluation results have determined that, in Board of Directors’ meetings, highly effective Board members with a broad perspective and values reflecting a variety of experiences and expertise are engaged in discussions that help to increase corporate value. Handouts and explanations about agendas are standardized and provided beforehand to encourage the members to take part in vigorous and constructive discussions and allow sufficient time for discussions. With regard to the action plan for 2021, which was made based on the results of evaluation of overall effectiveness of the Board of Directors for 2020, members of the Board of Directors and Audit & Supervisory Board have confirmed facts and issues as follows.

• Regarding preparations for the substantial integration of former Showa Denko and former Showa Denko Materials in January 2022, important issues including the optimization of the business portfolio were discussed sufficiently at the Board of Directors’ meetings, at meetings involving exchanges of views among all directors and corporate officers, and at other opportunities to discuss these issues.
• Taking into account the expansion of the Resonac Group and the progress in globalization of business activities of the Group, the Board of Directors will continue discussing how the governance and compliance systems of the Group should be developed to boost effectiveness.
• To facilitate the evolution into a “Co-creative Chemical Company,” as put forth in the long-term vision, further discussion from a broader perspective is required with regard to management strategies and the ideal state of the Board of Directors.
• The Board of Directors should revise the internal rules and regulations on the referring of proposals to Board of Directors’ meetings to secure sufficient time to discuss issues effectively and efficiently, even when a Board of Directors’ meeting is held by teleconference. In the action plan for fiscal 2022, the Board of Directors decided to ensure thorough discussion of management strategies for realizing the long-term vision, the ideal state of the Board of Directors, and the management of the Group at Board of Directors’ meetings by securing sufficient time and opportunities for such discussion. The Board of Directors also decided to continue taking measures to improve the effectiveness and efficiency of proceedings at the Board of Directors’ meetings and other meetings of executives.

(Additional comments)

For the optimization of the business portfolio, measures are being taken based on the results of discussions held as required on the direction of corporate strategies and medium- to long-term outlooks at the opinion exchange meetings as well as at the Board of Directors’ meetings. These measures can be said to be substantially sufficient.
As for the governance of overseas subsidiaries, it is necessary to conduct in-depth discussions on how to build an effective governance system to enhance the relevant functions.
For the two years beset with the COVID-19 crisis, we were unable to engage in the full-scale exchange of information, but we are being given a range of opportunities to foster cooperation, not limited to those provided at the meetings of the Board of Directors.