Measures to Strengthen the Effectiveness of Corporate Governance

The Company conducts an annual evaluation on the effectiveness of the Board of Directors, and strives to continuously enhance the functions and effectiveness of the Board of Directors from the two viewpoints of “enhancing trust from stakeholders (creating social value)” and “improving organizational performance (enhancing corporate value).” We work on the improvement measures for issues identified by the evaluation, and confirm the status of improvement during the evaluation of the Board of Directors in the following fiscal year, while at the same time continuing to confirm the evaluation of the current issues.

Evaluation Process

Starting from the fiscal year ended March 31, 2022, we have changed to a method of analyzing and/or evaluating the effectiveness of the Board of Directors using a third-party evaluation design (including, among other things, preparation and analysis of questionnaire survey as well as comparison with other companies, identifying issues, drafting action plans).
The analysis and/or evaluation based on the questionnaire survey and interviews using the third-party evaluation design is conducted every other year. During the interval year, we focus on initiatives to improve the issues identified from the questionnaire survey, while at the same time conducting evaluation through monitoring and by collecting opinions at the Independent External Auditors & Directors Meeting for the Effectiveness of Board of Directors.

In the effectiveness evaluation in the fiscal year under review (ended March 31, 2025), we updated the evaluation scheme, putting emphasis on the status of improvement activities for issues identified in the previous fiscal year, and reviewed improvement activities in the fiscal year under review for issues identified based on the effectiveness evaluations made in the fiscal years ended March 31, 2023, and March 31, 2024.

The Secretariat of the Independent External Auditors & Directors Meeting conducted a questionnaire survey targeting all of the Directors and Audit and Supervisory Board Members, and in addition to scrutinizing their answers of the questionnaire and their awareness of issues, we asked their opinions on the future roles and responsibilities of Directors and the improvement measures to enhance the effectiveness of the Board of Directors.
Then, the improvement measures are discussed at the Independent External Auditors & Directors Meeting freely, and recommendations are provided to the Board of Directors.

Evaluation Results of Effectiveness and Progress on Initiatives for Improvement

With the deliberation by the Board of Directors based on the answers to the questionnaire survey, we confirmed overall proper functioning and effectiveness of the Board of Directors of the Company.

The reasons why we confirmed that the effectiveness is secured are as follows.

a. The External Directors and the External Audit and Supervisory Board Members engage in the continuous effort of understanding the Company’s business through activities outside the Board of Directors meetings, including visits to business sites and exchange opportunities with Corporate Officers, Brand Managers, and other employees, and they offer valuable opinions in discussions based on their understanding gained through these activities.
b. The Board of Directors, of which the majority is composed of External Directors (Independent), has open and lively discussions based on their knowledge and management experiences gained outside of the Company.
c. There was periodical reporting regarding the progress of activities for the main business issues raised in the medium-term management plan (revised), and there were deep discussions.
d. A certain amount of progress has been made in improvement activities for issues raised in the effectiveness evaluation of the previous fiscal year.

Assessments of the Effectiveness of the Board of Directors and Improvement Measures

	Evaluation Result (Issues and Concerns)	Progress/Plan of Initiatives for Improvement
Current Fiscal Year (ended March 31, 2025) Evaluation results on issued identified in previous years	Allocation of more time to the consideration of important business matters, such as medium- to long-term strategies, and at the same time, utilization of knowledge of External Directors (Independent) and promotion of more active discussion at the meetings of the Board of Directors	(Activity status) For each activity item for the main business issues raised in the medium-term management plan (revised), a year-round schedule was drawn up and periodical progress report was made. A number of discussion sessions were held on issues in overseas businesses (in China and other countries) and business improvement KPIs, based on reports from the management personnel of local companies. (Plan) The next medium-term management plan will be defined in the next fiscal year. Accordingly, we will carefully select agenda items of Board of Directors meetings to activate and prioritize discussions on important business issues and medium- and long-term business strategies to define the next medium-term management plan.
	Further improvement in the quality of deliberations based on communication with our employees and inspection of local business offices in order to understand the reality of business conditions as well as risks and opportunities.	(Activity status) We had visits and inspection trips to stores, distribution centers, real estate holdings, domestic and foreign factories, etc. to properly respond to the changes in the business environment. We provided the Independent Officers with opportunities to have discussions with brand managers regarding brand strategies and opportunities to have exchange with Corporate Officers. (Plan) In addition to continuing to provide opportunities to visit stores, distribution centers, real estate holdings, etc., we will enhance exchange opportunities for Independent Officers with section managers and department managers who engage in Supply Chain Management (SCM) reform and sales activities.
	We will put in place an organizational system that can correct plans in a proper and timely way as necessary through unfailing reporting of the statuses and results of executing Board of Directors resolutions, including the progress of the medium-term management plan.	(Activity status) There was a progress report and deep discussions on activities for the main business issues raised in the medium-term management plan (revised) and the structural reform of the specified wholly-owned subsidiary company (Wacoal Corporation). Structural decisions were made on stock transfer, business transfer, and the consolidation and restructuring of domestic factories based on the monitoring of the profitability of each subsidiary company. Periodical reports were made on activities for asset reduction, and a resolution was made to sell some of the real estate holdings. (Plan) Included in “item 5” listed below.
	Reinforcement of the distribution of meeting materials in advance and the improvement of the quality of discussion by clarifying the argument of the materials	(Activity status) Requirements for meeting documents were defined and communicated to those who prepare meeting documents in order to improve the clarity of discussion points. However, there is room for improvement in descriptions of executive summaries, in which clear statements should be made on the intention and background of summiting the document to the Board of Directors, discussion points, and findings in the Management Meeting. (Plan) We will work for early submission of meeting documents to secure time for the Board of Directors secretariat to check and correct them in order to further improve the quality of discussions by clarifying discussion points through observing the meeting document requirements.
	Arrangement of the system that allows us to identify risks and opportunities and take the risks adequately accommodating to the changes in the business environment	(Activity status) Progress has been made in improving meeting materials to clearly state matters that should be recognized as risks (uncertainties) when discussing the transfer of shares or businesses, or M&A deals, but there is room for improvement in the area of uncovering risks and opportunities of wider scope that take into account the external environment and the situation of the Company itself, and of deepening discussions of the same (Plan) For the definition of the next medium-term management plan, we will list items to be prepared before plan definition and revise the format to facilitate progress management against the planned schedule. We will improve the process of defining business plans to facilitate the effectiveness evaluation of strategic scenarios and to activate discussions and decisions on recovery plans and on the need for strategy changes when risks or opportunities materialize.
	Development of a successor nurturing plan including the selection and nurturing process of candidates and the implementation of monitoring	(Activity status) We consulted the Nomination of Directors Advisory committee on the process of selecting board member candidates targeting Corporate Officers and department managers, and had discussions based on responses from the committee. We implemented a human resource development program for management personnel candidates of the specified wholly-owned subsidiary company (Wacoal Corporation) naming a Corporate Officer of the subsidiary as the mentor. (Plan) We will clarify the selection/deselection criteria targeting department managers and those in higher positions, and start the construction of a successor pool and the promoting and nurturing of human resources. Our plan is to further strengthen the supervisory and/or advisory functions of our Board of Directors by further utilizing the knowledge of External Directors (Independent), in addition to implementing the initiatives described above.

Revisions in Wacoal’s Corporate Governance System

1977	Wacoal issues ADRs*(American Depositary Receipts)	Wacoal becomes the eighth Japanese company to issue ADRs. Upon issuance, the SEC (U.S. Securities and Exchange Commission) requires consolidated financial statements and accounting reports in accordance with U.S. GAAP.
2002	Introduction of the corporate officer system → Number of directors: 13 → 9	In June 2002, the Company employs a corporate officer system in order to delegate authority and clarify responsibility more appropriately and efficiently. At the same time, the number of directors is reduced.
2005	Establishment of a pure holding company	The Company transfers to a pure holding company system to facilitate decision-making on Groupwide strategy, to optimize the allocation of resources, and to clarify the responsibilities and authority of operating companies so that they can execute operations flexibly.
2005	Appointment of outside officers	To promote the fairness and independence of the Board of Directors and the Audit & Supervisory Board, the Group increases the number of outside directors by two members and the number of outside Audit & Supervisory Board members by one member.
2007	Establishment of the Executive Compensation Advisory Committee → Number of committee members (including outside directors): 4	Regarding the appointment, promotion, and remuneration of the directors and executive officers, the Executive Compensation Advisory Committee, chaired by the director of the Administrative Department, is established with outside directors included as members.
2010	Registration of all outside officers with the Tokyo Stock Exchange as independent officers → Number of independent officers registered: 6	All outside directors and outside Audit & Supervisory Board members are registered with the Tokyo Stock Exchange as independent officers.
2015	Establishment of the Independent Outside Officers Meeting	The Independent Outside Officers Meeting is established with the intention of sharing information about improving corporate governance, meetings of the Board of Directors, internal audits, etc. The committee includes independent outside officers.
2018	Establishment of the Executive Compensation Advisory Committee and the Executive Nomination Advisory Committee	The Executive Compensation Advisory Committee, which was established in 2007, becomes the Executive Compensation Advisory Committee and the Executive Nomination Advisory Committee.
2021	Introduction of Compensation Framework in the Form of Restricted Stock	We have introduced a restricted stock compensation plan for Directors (excluding outside directors)and discontinue the share-based stock options, for further sharing of price fluctuation risk with our shareholders and increasing incentives to contribute to the improvement of share price and corporate value.
2022	Revised the ratio of base compensation and stock compensation	Compensation of Officers consists of "base compensation," "performance-based bonuses," and "Transfer-restricted stock compensation. Revised the ratios of stock compensation to basic compensation so that stock compensation accounts for a larger percentage of the compensation of officers as they rise in rank.
2024	Introduction of Performance-Linked Stock Remuneration Plan	We have introduced a Performance Share Unit for directors (excluding External directors) in order to clarify the link between compensation and company performance and our share value, and to further increase motivation to contribute to improving our corporate value.

* In 2013, Wacoal stopped listing ADRs on the U.S. NASDAQ market and de-registered with the SEC.