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. 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, analysis, and comparison with other companies of questionnaire survey, identifying issues, drafting action plans).
With the aim of further improving the effectiveness of the Board of Directors from the viewpoints of “enhancing trust from stakeholders (creating social value)” and “improving organizational performance (enhancing corporate value)”, we conduct a questionnaire survey for all Directors and Audit & Supervisory Board Members, and conduct interviews of External Directors and External Audit & Supervisory Board Members through a thirdparty organization to gain a deeper understanding of their responses and awareness of the issues raised in their comments. We compile improvement measures based on the analysis of such responses and issues. The improvement measures are discussed at the Independent External Auditors & Directors Meeting and recommendations are provided to the Board of Directors.

The evaluation items of the questionnaire survey are as follows:
　a. roles and/or responsibilities of the Board of Directors
　b. structure of the Board of Directors
　c. quality of discussions (agendas, content of materials, etc.)
　d. constructive dialogues with stakeholders

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 sharing opinions at the Independent External Auditors & Directors Meeting.

Evaluation Results of Effectiveness and Progress on Initiatives for Improvement

As a result of the analyzing the responses to the questionnaire survey conducted during the fiscal year ended March 31, 2022, each evaluation item received a score higher than the standard score and we received an evaluation from a third-party vendor to the effect that our Board of Directors is generally functioning properly and its effectiveness can be confirmed.

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

	Evaluation Result (Issues and Concerns)	Progress/Plan of Initiatives for Improvement
Fiscal Year ended March 31 2022	Expansion of agenda (process for reviewing medium to long-term strategies, subsequent reporting of matters to be resolved)	We expanded the scope of delegation of decision-making related to business execution and improve the efficiency of the operation of our Board of Directors, while expand the time for confirming the progress on medium to long-term strategies and/or investment projects, understanding the management situation of our group companies, and sharing promotional initiatives. We also focused on more efficient operations by striving to provide meeting materials as early as practicable, and by sharing discussions at the Group Management Meeting.
	Common recognition and equalization of roles expected from External Directors	We organized the roles expected and reviewed the skills matrix, taking into account the key strategies of the new medium-term management plan, whose first year starts from the fiscal year ended March 31, 2023. We also promoted participation in meetings and projects relevant from the view of roles expected and utilization of skills possessed by each Director.
	Clarification of roles of the Nomination of Directors Advisory Committee, and improvement in transparency in the process of considering succession and Director selection and/or dismissal	We revised the committee rules and established operational guidelines for the Nomination of Directors Advisory Committee and the Remuneration of Directors Advisory Committee to clarify their roles. At the beginning of the current fiscal year, we provided recommendations to our Board of Directors on the annual activity plan including the matters to be considered and schedule, and thereafter, we reported regularly to our Board of Directors, thereby striving to improve transparency.
	Improvement in input to External Directors through store visits, expanded contacts with employees, trainings, etc.	We visited stores and business offices to gain the better understanding of the business and to update the current awareness as necessary. In order to increase communication and mutual understanding among the members of the Board of Directors, we also held lunch meetings on a regular basis to have open and frank conversations, while following COVID19 guidelines.
Fiscal Year ended March 31 2023	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 and promotion of more active discussion at the meetings of the Board of Directors	We have increased the number of agenda items other than decision-making items related to business execution, such as consideration of medium- to long-term business issues, reporting and/or sharing important brand strategies or promotion strategies. We also have moved forward with advance preparation and environmental arrangement that led to active discussion.
Fiscal Year ended March 31 2023	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	We have set up an opportunity for a planned visit and/or inspection at stores, factories and business offices including overseas, as well as opportunities for communicating with the Corporate Officers and managers. 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, while continuing to implement 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.

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