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 FY2024 evaluation, we carried out the following measures to enrich deliberations and improve the effectiveness of the Board of Directors.

• 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

This section contains an overview of the Board of Directors effectiveness evaluation for FY2025.

Evaluation process

The evaluation process used in the FY2025 Board of Directors effectiveness evaluation is as follows.

• Discussion of the course of action for carrying out the effectiveness evaluation (July 2025)
  • Objectives of carrying out the evaluation for FY2025
  • Evaluation procedures
  • Evaluation schedule
  • Items to be evaluated
• Survey of directors (July 2025)
• Individual interviews with directors based on the results of the survey (July 2025)
• Discussion of the results of the survey and individual interviews at a Board of Directors meeting (August 2025)
• Report of the improvement plan based on the results of the discussion (September 2025)

Evaluation items

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 (breadth and depth)
    • Time spent discussing each discussion topic
    • Explanation of discussion topics (breadth and depth)
    • 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 independent directors
  • Overall evaluation
• Committees
  • Composition of committees
  • Deliberation process and discussions within the committees
    • Nominating Committee
      • CEO succession
      • Consideration of new independent 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

As an overall evaluation, our efforts to improve the Board of Directors’ function as a monitoring board we are aiming for were (highly) recognized. To further enrich and improve the effectiveness of the deliberations of the Board of Directors, we have decided to carry out the following measures.

• As we work with the execution side to draft the narrative of our mid-term corporate value creation, we will create opportunities for active discussions about the positioning and interpretation of AI strategies and sustainability in our management policy and strategy.
• We will further promote the active use of independent directors’ meetings (executive sessions) by appointing and clarifying the duties of the lead independent director, and by reviewing the frequency and duration of the meetings.

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.