Annual Report 2024 Outside Directorsʼ Messages

It has been two years since I took on the role of Outside Director and Chair of the Audit & Supervisory Committee. As we continually assess the effectiveness of our governance, in FY2023, we pursued two additional initiatives to stimulate further discussion—an essential action for further improvements—aimed at stronger monitoring functions.

　In one initiative, we aim to efficiently prioritize agenda items at Board meetings. Therefore, we have minimized explanations on topics that can be adequately understood from meeting materials. This allows more time for thorough discussion on subjects that require it. The change resulted in our discussions becoming livelier and improved their overall quality, and other directors have also noted these improvements. The other initiative was for introducing an open discussion time after Board meetings, starting in the second half of the fiscal year. During this time, we freely discuss future-focused topics, such as our simulations as we aim for a one-trillion-yen market capitalization and medium-term financial policies over the next 10–20 years. Although we have not reached a conclusion on the management capital required, timelines, or methods for realizing this goal, we are sharing various simulations, including those from other companies, aligning executivesʼ perspectives, and continuing meaningful discussions.

Looking back on the past year of Board meetings, we have actively debated topics such as acquiring treasury shares and relocating our head office. Our Outside Directors have offered suggestions on acquiring treasury shares, considering aspects such as the current stock price trends, dilution rate from stock options, and returns to shareholders. They also made suggestions on the appropriateness of the total purchase amount and future return policies.

　Understanding the execution sideʼs perspectives and management challenges is essential for further invigorating Board discussions. With this goal in mind, as Chair of the Audit & Supervisory Committee, I interviewed executive officers over the past year. In addition to operational concerns, given the significant expansion of our team in recent years, I also asked about the state of on-site employees and progress with talent development. Each department has been advancing creative initiatives to develop its staff and I confirmed that there were no particular concerns.

After receiving approval at the General Meeting of Shareholders in August, a new outside director has joined, bringing the total to five, equaling the number of inside directors. We also changed from the previous structure in which all Outside Directors concurrently served as Audit & Supervisory Committee members. Two of the five Outside Directors no longer hold this dual role as part of efforts to differentiate roles. We hope to better use their individual expertise and insights to strengthen Sansanʼs management monitoring.

　Sansan aims for a 30% female director ratio for the Board of Directors by FY2029 to promote diversity, although we still face challenges in this regard. To achieve this goal, we must develop female directors from within the company. Currently, the number of female directors increased from one to two, with hopes that this will, in the future, help nurture promotion of women to the director level at Sansan.

Close collaboration between the Committee and the Internal Auditing Department is critical, as we do not have full-time Audit & Supervisory Committee members. We previously shared inquiries and provided opinions between the two based on internal audit results. However, going forward, we plan to establish a system for holding regular meetings between the Chair of the Audit & Supervisory Committee and the Secretariat/Internal Auditing Department to have advanced and more in-depth discussions on internal audit policies.

　I also hope to involve other Audit & Supervisory Committee members in the executive interviews I have been conducting as Chair. Using the information obtained from these interviews and the Committee, we aim to create a system with appropriate sharing and collaboration with Outside Directors who are not Committee members.

We have been discussing a new Board structure within the Nomination and Remuneration Advisory Committee from August 2024, which is to include the appointment of Outside Directors. We also were informed at the Board that discussions on our purpose, looking 100 years into the future, are progressing internally as of FY2023, although specific succession plans have yet to be formulated. Awareness of succession planning among executives is increasing, and we will continue to progress with these considerations.

Fast decision-making under the CEOʼs strong leadership, which drives steady growth, is a notable feature of our management. Decisions to stop something are generally harder and involve more hesitation than starting something. However, the speed at which we decide to halt initiatives when things do not seem to work out—such as reversing the organizational restructuring for resource optimization implemented during the pandemic or withdrawing from unprofitable businesses—is impressive. Sansanʼs sincere commitment to addressing social issues is deeply rooted throughout the company. Each employee possessing the ability to create the systems necessary for problem-solving is a strength for Sansan. During discussions on our financial policies, I sense the management teamʼs rigorous approach to numbers, and I do not perceive any significant issues or concerns with our current management.

　I see my role as offering appropriate suggestions based on decision-making and legal risks, respecting the need for quick and flexible judgment. Under strong leadership, all Outside Directors, including me, are responsible for closely monitoring management decisions to ensure they are not made incorrectly or taken in a different direction.

　Sansan has transitioned to a new phase by introducing a medium-term financial policy. To continue this policy, I intend to continue judicious monitoring and by deepening my understanding of our evolving services, contribute to strengthening corporate value by offering management advice.

Outside Director,
Audit & Supervisory Committee Member
(Chair of the Audit & Supervisory Committee and Chair of
the Nomination and Remuneration Advisory Committee)
Maki Suzuki