In order to verify that the Board of Directors is appropriately fulfilling the duties and functions expected of it, and to strive for improvement, Mercari carries out an evaluation of the effectiveness of the Board of Directors every year.

Based on the results of the FY2023 evaluation, we carried out the following measures to enrich deliberations and improve the effectiveness of the Board of Directors.

• Create and make use of mechanisms that enable participants to actively propose significant management agenda items and major strategy topics that should be dealt with by the Board of Directors
• Connect the roadmap with financial/business performance information and promote monitoring based on business execution reports that more comprehensively combine qualitative and quantitative information
• Further enrich onboarding for new directors and collaboration between outside directors

This section contains an overview of the Board of Directors effectiveness evaluation for FY2024.

Evaluation process

The evaluation process used in the FY2024 Board of Directors effectiveness evaluation is as follows.

• Discussion of the course of action for carrying out the effectiveness evaluation (July 2024)
• Objectives of carrying out the evaluation for FY2024
• Evaluation procedures
• Evaluation schedule
• Items to be evaluated
• Survey of directors (July 2024)
• Individual interviews with directors based on the results of the survey (July 2024)
• Discussion of the results of the survey and individual interviews at a Board of Directors meeting (August 2024)
• Report of the improvement plan based on the results of the discussion (September 2024)

Items evaluated

In the survey, the items listed below were evaluated both quantitatively and qualitatively, with respondents asked to rate each item as well as fill in a free-response section. In the individual interviews, participants were asked to provide their opinions regarding important items, which were defined based on the results of the survey.

• Board of Directors
• Composition of the Board of Directors
• Administration of the Board of Directors
• Time spent deliberating matters to be resolved
• Explanation of matters to be resolved (quality and duration)
• Time spent discussing each topic to be discussed
• Explanation of topics to be discussed (quality and duration)
• Supervision in Board of Directors meetings and response to advice
• Agendas of matters to be reported and/or discussed
• Advance provision of information necessary for discussion
• Appropriate questioning and facilitation by the chairperson regarding matters to be reported and/or discussed
• Connections and sharing of information between the Board of Directors and the three committees
• Deliberation process and discussions about basic management policies
• Mid-term management policy/strategy
• Sustainability (ESG/materiality)
• Future agenda creation
• Dialogue with shareholders and investors
• Support system for outside directors
• Overall evaluation
• Committees
• Composition of committees
• Deliberation process and discussions within the committees
• Nominating Committee
• CEO succession
• Consideration of new outside director candidates
• Director evaluation, executive officer evaluation, and human resources
• Compensation Committee
• Director compensation plans
• Executive officer compensation plans
• Audit Committee
• Internal audit structure supporting the Audit Committee’s audits
• Cooperation policies and structures for the Audit Committee to gather information from the execution side

Evaluation results and improvement plan

Overall, we were recognized for our initiatives to improve how effectively the Board of Directors fulfills Mercari’s objectives in its role as a monitoring board (striving for strategic agendas and discussions separating supervision and execution, including agendas about basic management policies). To further enrich deliberations and improve the effectiveness of the Board of Directors, we have decided to carry out the following measures going forward.

• Place an even greater emphasis on the separation between supervision and execution, focus Board of Directors discussions more on major strategy topics and significant management agenda items, and create and make use of mechanisms that enable participants to actively make various proposals
• In addition to the roadmap and financial/business performance information, promote monitoring based on business execution reports that more comprehensively combine qualitative and quantitative information from the perspectives of sustainability and human capital management

Mercari will use the results of the effectiveness evaluation and the various recommendations received from the directors to continue to work toward improving the effectiveness of the Board of Directors.