Corporate Governance

Interview with an Outside Director Outline of Corporate Governance Governance Committee Director Compensation System Management Replacement Cycle Appointment Guideline for Outside Directors Business Risk Compliance

Interview with an Outside Director

Interview with an Outside Director

A Board of Directors Containing Open and Free Discussions

Daito Trust's Board of Directors features a well-rooted style of decision-making built upon a free-flowing exchange of views that has no barriers between the standing directors and the outside directors. Having a Board of Directors be a place for open and free discussion is crucial to ensuring a company is being steered in the right direction. The Company's Board of Directors is said to be highly regarded when it comes to effectiveness. Arguments regarding each proposal are thoroughly discussed by the Board, and even if the proposal was passed by a resolution at the Executive Management Meeting, it may be set aside for further review and reexamination following discussions by the Board. Furthermore, the outside directors have a diverse set of backgrounds, so they can provide effective advice for the executive organization from perspectives based on their various careers combined with their individual insight and wisdom. In my opinion, this is a strength of Daito Trust's governance system. In my own case, capitalizing on my experience of having been engaged in the financial industry for a long time, I probe into whether risks that are generally overlooked are pointed out and looked into further, especially in the area of investment proposals. I also try to ask in-depth questions such as, is the investment well-aligned with Company profits? Does it earn a return commensurate with the risks involved? And, what is our judgment of the valuation of a proposal or a marketable security? The most recent project was the acquisition of the real estate developer INVALANCE Ltd. in 2020, which was put forth as a measure to strengthen our core businesses while also backing Tokyo metropolitan area strategy. I think this was a good use of M&A. When it comes to investment projects, the postinvestment follow-up is also important, including the case of the INVALANCE acquisition. The Company will exercise its oversight responsibility, as it has before for the domestic and overseas investment projects handled up through the present.

Promoting Sustainability through Our Business Activities

Daito Group businesses that are directly connected to the social foundation, such as housing and living, including rental housing, have high affinity with the sustainability approach and provide higher earnings. In my view, a business model can exist whereby making profits leads straight to social contribution. Taking advantage of this type of business environment, in FY2020 the Company designated the Daito Group's Seven Material Issues, directed at promoting sustainability management. The work being done on these material issues is currently staged at examining KPIs in ongoing discussions at the Board of Directors. In order that the designated material issues be placed under management, the Board must continue discussion and follow up on the essential tasks of specifying the appropriate KPIs and incorporating them into management plans, as well as constructing a framework in which their advancement is highly effective. In the times ahead, we need each and every employee, from the management team to those at local work sites, to not only pick up knowledge of sustainability, but also ensure that a culture of ownership will be fostered through actions and implementation. Our future goal is that the tenants living in the 1.16 million rental housing units in Japan managed by Daito Trust, and possibly members of the broader society as well, will see themselves as "contributing to achieving SDGs by living in rental housing from Daito Trust Construction." The Daito Group has a culture of hope where each time targets are set, everyone presses ahead in unity. Now that the medium- to long-term material issues have been clearly stated, I look hopefully at the ability of the Group to move forward as one.

Toward Achieving the New Five-Year Plan

As a result of the COVID-19 pandemic, some business segments could not make progress in line with their initial plans stipulated in the New Five-Year Plan. However, we have been actively taking on the challenge of coming up with new initiatives, such as promoting online activity as well as developing and selling new products that address environmental issues. Although we are still in an era of uncertainty, I would like to see us move forward and utilize change as a business opportunity. In addition, new challenges make a robust governance system that supports these efforts necessary. In FY2020, in order to preserve a place where outside directors can exchange views during the COVID-19 pandemic, we started a board of outside directors. The outside directors share their sense of the issues among each other, and when there are opinions and advice that should be discussed, they share them with the full Board of Directors. By squarely performing these roles and others, they seek to raise the Board's effectiveness. Toward achieving the New Five-Year Plan, one of the major roles the Board of Directors should assume is to exercise solid oversight of the business segments' portfolio strategies. From the beginning, the existing businesses have conducted appropriate analysis and monitoring of new investments and businesses, and through exhaustive discussions they have sought to strengthen their business portfolios and, as a result, improve profitability.