Corporate Governance

We have a Corporate Governance Basic Policy that establishes policies and frameworks for achieving effective corporate governance with the aim of promoting sustainable growth of the Group and improving corporate value over the medium to long term. We constantly review our philosophy of corporate governance and work to improve it.

Furthermore, based on our Management Philosophy, we manage in a way that contributes to value creation for various stakeholders such as shareholders, customers, employees, and local communities, we are ensuring the fairness, transparency, and speed of decision-making, and we are building a corporate governance system appropriate for a regional financial group.

The Company has an Audit and Supervisory Board, and its Board of Directors, auditors, and Audit and Supervisory Board are responsi-ble for supervising management. Auditors, including independent outside auditors, audit the legality and appropriateness of the directors’ execution of their duties by attending meetings of the Board of Directors and reviewing important documents, thereby fulfilling their management auditing function. In addition, independent outside directors supervise management from an independent standpoint and provide opinions and proposals to ensure the appropriateness of decision-making. The Company has adopted the current corporate governance system because it thinks that this system adequately fulfills the auditing and supervisory functions.

In order to ensure that the Board of Directors functions most effectively and efficiently, and from the perspective of revitalizing the Board of Directors, the Articles of Incorporation stipulate that the number of directors be no more than 10. In order to ensure the independence of the Board of Directors and to demonstrate that it functions fairly and transparently, the Company appoints a number of outside directors who maintain views that are independent from the Group, making up at least one-third of the members. By combining internal directors who are familiar with the Group’s business with outside directors with extensive experience and knowledge outside the Company and giving the Board of Directors diverse members with different backgrounds of specialist knowledge and experience, different, the group ensures a good balance of knowledge, experience and skills on the Board of Directors.^（＊） As of June 21, 2024, of the eight directors (seven men and one woman), three are independent outside directors. To ensure the effectiveness of audits, the Articles of Incorporation stipulate that the Audit & Supervisory Board has no more than five members, with at least half being outside members. As of June 21, 2024, of the five Audit & Supervisory Board members (four men and one woman), three are independent from the outside.

We believe that the specific expertise and experience required by the Company are in Regional Sales, which is indispensable in light of the business model of our subsidiary companies, which are regional financial institutions, and in Corporate Management and Organizational Operations, in Legal Affairs and Risk Management, and in Finance and Accounting, which are universally required for corporate management, and in International and Market Operations, and ICT and Digital Transformation (DX), which require higher levels of specific expertise in order to respond to changes in the business environment. The combination of skills of the Board of Direc-tors as a whole, including the Audit & Supervisory Board members and executive officers who actually make up the Company’s Board of Directors in addition to the directors, and details of the skills of each, are as follows.

The Board of Directors defines the scope of matters to be resolved by the Board of Directors in accordance with the rules of the Board of Directors, clarifies the scope of delegation to the Management Committee and management group, and makes important decisions on policy associated with risk compliance, as well as providing management oversight for more effective management. In addition, with the aim of strengthening collaboration within the Group and improving governance, the Board Meetings of the Company and the Bank of Yokohama operate integrally, and we have put in place a system that allows our directors and Audit & Supervisory Board Members to participate as observers in the Higashi-Nippon Bank’s Board Meetings and other meetings.

Our effectiveness assessment is based on questionnaires and interviews from the perspective of utilizing third party viewpoints, the results of which are tabulated and ana-lyzed, before the self-assessment is conducted. The specific assessment method is as follows.

In FY2023, in light of the roles and responsibilities to be fulfilled by the Board of Directors, we set four themes to be continuously addressed and promoted initiatives to improve the Board Meeting effectiveness. As a result, the Board of Directors conducted and shared a self-assess-ment that “the Board Meetings as a whole continued to be generally effective in FY2023”.

In FY2024, based on the evaluation of effectiveness in FY2023, we will work to further improve the effectiveness of the Board Meetings in order to promote sustainable corporate growth and enhance corporate value over the medium to long term.

For more information on our Board of Directors Effec-tiveness Assessment, please see our Corporate Gover-nance Report.

• Corporate Governance Report

Audit & Supervisory Board members audit the legality and appropriateness of Board of Directors’ business execution by attending important meetings, such as Board of Directors meetings, by examining the state of operations and assets, by reviewing documents related to important decisions, and also by communicating with internal audit and supervisory departments and group companies, and by exchanging information with accounting auditors and similar parties, as stipulated in the audit policy and audit plan set by the Audit & Supervisory Board. In FY2023, we mainly focused audits on the “status of initiatives aimed at sustainable growth and medium-to long-term enhancement of corporate value”, “status of establishment and operation of the Group’s internal control systems”, and “status of synergies from the business integration with THE KANAGAWA BANK and the construction of a risk management system”.

Audit & Supervisory Board Members interview officers and employees of the Company and its subsidiaries and visit subsidiaries’ sales branches to conduct audits, after which they compile their findings and report them to the Board of Directors and the Management Committee.In addition, while discussing key audit matters (KAMs) with the accounting auditors, they receive reports on the status of their audits.

The Management Committee, which consists of representative directors, directors, and others, was established under the Board of Directors.
Based on the basic policy and management plans decided by the Board of Directors, the Management Committee discusses and decides on important business execution matters and strategies for flexible business execution within the Group, and also holds preliminary discussions on resolutions of the Board of Directors as necessary.
In addition, for important matters related to the Group’s business execution, the meetings listed on the right are positioned as part of the Manage-ment Committee, and these meetings conduct intensive deliberation on items within their respective jurisdictions.

In order to promote sustainable growth and enhance corporate value over the medium to long term, the Group has formulated a succession plan for the top management of the Company and its major subsidiar-ies, the Bank of Yokohama and the Higashi-Nippon Bank.
The succession plan is divided into three groups: the director pool, the executive officer pool, and the executive candidate pool, and candidates for President & CEO are selected from each pool. By implementing training programs tailored to the candidates’ capabilities, qualities, experience, etc., we are systematically cultivating human resources who will take on top management roles in the future. Specifically, we aim to broaden the scope of knowledge and skills of candidates through planned rotations of assignments, training and seminars, and to raise awareness among candidates through external assessments and interviews with outside directors and top management.
The status of the formulation and operation of the plan is regularly reported to the Compensation and Personnel Committee, which is composed solely of outside directors.
Outside directors not only receive reports, but also strive to improve the effectiveness of the Succession Plan by gaining a multifaceted understanding of the candidates through various meetings, interviews, and discussions,and by providing advice and recommendations to the candidates based on their extensive knowledge and experience.

In order to enhance Board of Directors meetings, the Company provides outside directors and outside members of the Audit & Supervisory Board with advance explanations of the agenda of the Board of Directors meetings, as well as opportunities for on-site visits to sales branches of the Group companies.
When outside directors and outside members of the Audit & Supervisory Board are appointed, they are provided with the opportunity to acquire knowledge and information about the Group’s management philosophy, management policies, business plans, and business structure. Further-more, we work for coordination between the outside directors and the representative director, the Audit & Supervisory Board members, internal audit departments, and accounting auditors, as well as for interchange between the outside directors and the directors of the Group companies.
In order to ensure that directors obtain information about the company in a timely and appropriate manner, a staff member is assigned to the Corporate Planning Department to assist directors in obtaining information.
To ensure that audits are conducted effectively, we have a dedicated staff member in the Audit & Supervisory Office to support audits by the Audit & Supervisory board.
To enable directors and Audit & Supervisory Board Members to fulfill their roles and responsibilities, the Company provides opportunities to obtain knowledge and information, receive advice from external experts, and raise awareness through peer evaluations (mutual evaluations) by directors.

At our Investor Relations Day in February 2024, outside directors had an opportunity to meet with investors and analysts in order to directly hear and understand voices from the market.

In order to enhance Board of Directors deliberations and improve governance, study sessions were held by outside experts, focusing on themes related to digital/IT, sustainability, and open innovation. In addition, we held study sessions on trends in new businesses of other companies in the industry with the aim of expanding our business areas utilizing strategic investments.

In order to deepen their understanding of the subsidiary banks’ business operations and sales sites, outside directors inspected the Bank of Yokohama, the Higashi-Nippon Bank, and THE KANAGAWA BANK sales branches. At the sales branches, they observed business operations and held meetings and discussions with regional headquarters managers and branch general managers.

For the purpose of ensuring objectivity and transparency in compensation and personnel matters of directors and executive officers (hereinafter, "Officers"), a Compensation and Personnel Committee consisting solely of outside directors has been established as a voluntary mechanism. The Compensation and Personnel Committee performs the functions of both a nominating committee and a compensation committee.

Composition/Independence: Composed solely of outside directors selected by resolution of the Board of Directors (hereinafter referred to as "Committee Members"). In order to ensure the independence of the Compensation and Personnel Committee, all Committee Members must be independent outside directors. The Chairperson of this Committee shall be elected by the Committee Members from among themselves. In principle, the President shall provide explanations to the Committee, and if necessary, persons other than the Committee Members designated by the Chairperson may be allowed to attend the meeting and their reports or opinions to be heard.
Authority and Role: Discussion on compensation and personnel matters for directors of the Company and　its subsidiaries. The Committee shall deliberate on and decide the following matters.
１　Compensation of the Company's Officers
（1）Details of the Company's compensation structure according to position
（2）Individual compensation amounts based on the Company's position-specific compensation table (excluding performance-linked compensation)
（3）Amount of compensation linked to the Company's performance
（4）Performance evaluation of the Company's executive directors and executive officers
（5）Evaluation of the achievement of performance targets for the Company's medium- and long-term incentive compensation
（6）Establishment, revision, or abolition of systems related to compensation for officers of the Company
（7）Other matters deemed necessary by the Chairperson
2　Compensation of officers of subsidiaries
（1）Details of subsidiaries' tables of compensation according to position
（2）Amount of compensation linked to the subsidiary's performance
（3）Evaluation of the achievement of performance targets for the subsidiary's medium- and long-term incentive compensation
（4）Establishment, revision, or abolition of systems related to the compensation for officers of subsidiaries
（5）Other matters deemed necessary by the Chairperson
3　Personnel matters regarding officers of the Company and its subsidiaries
（1）Appointment and dismissal of candidates for directors of the Company, and dismissal of directors, and selection and dismissal of executive directors, representative directors, and the President and Executive Officer of the Company
（2）Selection and dismissal of the president of a subsidiary
（3）Other matters deemed necessary by the Chairperson
Frequency of meetings: As necessary.
Secretariat: Office of the Secretary, Corporate Planning Department

The Company has adopted by resolution of the Board of Directors a policy (‘the Policy’) concerning decisions on the details of remunera-tion etc. for individual directors. The outline of the document is as follows. This policy was decided on after deliberation by the Compen-sation and Personnel Committee, which is comprised solely of outside directors.

Directors (excluding non-executive directors and outside directors)

The details of compensation etc. for Audit & Supervisory Board members are determined through discussions with them.