Governance

Corporate Governance

Basic Views on Corporate Governance

While emphasizing initiatives to achieve sustainable corporate growth and improvement in corporate value over the medium to long term, MHC aspires to contribute to a more prosperous society by respecting the rights and interests of all of its stakeholders–shareholders, customers, local communities, and employees–and fulfilling their trust in the Company, based on the views presented below.
With the recognition that it is one of its social responsibilities to ensure transparent and sound management, MHC continues to work on initiatives to enhance corporate governance by boosting the activity of the Board of Directors, reinforcing the Audit & Supervisory Committee and the internal audit system, ensuring timely and appropriate disclosures of information, and actively engaging in investor relations (IR) and other activities.

(1) Fostering Sound Corporate Culture

In accordance with Our Vision, which guides all of MHC’s activities, and the Mitsubishi HC Capital Group (hereinafter “MHC Group” or “Group”) Code of Ethics and Code of Conduct, which serve as standards for the decisions and behaviors of all employees, MHC strives to understand the diversity of its various stakeholders including shareholders, customers, local communities, and employees and foster a corporate culture that respects their rights and perspectives and sound business activities.

(2) Ensuring Appropriate Information Disclosure and Transparency

MHC conducts proactive and continuous information disclosure in order to be trusted and properly evaluated by each of its stakeholders. It also establishes and appropriately operates internal systems to facilitate the swift and impartial disclosure of accurate information regarding its management policies, business strategies, business activities, financial condition, etc. In addition to the items MHC is required to disclose pursuant to laws and regulations, it actively and voluntarily discloses non-financial information deemed useful to its stakeholders.

(3) Ensuring the Rights and Equal Treatment of Shareholders

MHC takes appropriate steps to ensure that the rights of shareholders are secured and can be exercised effectively, and all shareholders, including minority shareholders and foreign shareholders, are treated equally.

(4) Constructive Dialogue with Shareholders

Through events such as General Meetings of Shareholders, financial results briefings, and other domestic and overseas investor relations events, MHC pursues proactive and constructive dialogue with diverse shareholders. It thereby seeks to gain understanding from shareholders regarding matters such as its business strategies and further enhance corporate governance through dialogue.

(5) Ensuring Effectiveness of the Board of Directors

All members of the Board of Directors call upon their experience and insight as they engage in free and open discussions, supporting appropriate risk-taking. In this manner, they adequately fulfill their duties and responsibilities to achieve the sustainable growth of MHC, improvement in its corporate value over the medium to long term, enhancement of its capital efficiency and other figures, etc.

Corporate Governance Framework

MHC is a company with an Audit & Supervisory Committee and has established a Board of Directors to be responsible for important decision-making and supervisory functions, and an Audit & Supervisory Committee to be responsible for audit and supervisory functions.
In order to further enhance its corporate governance, MHC has also established a Nomination Committee and a Compensation Committee to serve as advisory bodies to designate the President & CEO and determine the compensation, etc. of Directors. Further, MHC has established a Governance Committee, which consists of Outside Directors, Representative Directors, etc., to serve as an advisory body to the Board of Directors regarding the improvement of the effectiveness of the Board of Directors, etc.
Alongside adopting an executive officer system, MHC has established an Executive Committee to serve as a body for deliberation and decision-making on important management matters.

Corporate Governance Framework

Matters Concerning the Board of Directors

MHC implements a system to manage and operate business in line with the basic policy of the MHC Group decided by the Board of Directors. MHC’s Directors possess qualities appropriate for their positions, giving the Board of Directors a set of diversified and sufficient skills.
In addition, for timely, appropriate, and smooth provision of information particularly to Outside Directors, the Governance Planning Gr. of the General Affairs Department serves as the secretariat for the Board of Directors, and the Audit & Supervisory Committee Office has been established to assist the duties of Directors who are Audit & Supervisory Committee Members.
MHC is engaged in initiatives for stimulating discussions on important agenda items, such as (1) providing prior explanations, (2) having several times of deliberations at Board of Directors meetings, and (3) regularly confirming the progress of the items after decisions are made.
Each year, all Directors conduct a review of activities of the Board of Directors and evaluate its effectiveness. In addition, discussions attended only by independent Outside Directors and meetings for independent Outside Directors to exchange opinions with the Chairman and the President & CEO are held regularly, and in the event that an issue, etc. is raised there, it will be appropriately responded to and improved.

Matters Concerning the Governance Committee, Nomination Committee, and Compensation Committee

MHC has established the Governance Committee, consisting of Outside Directors, Representative Directors, etc., which exchanges a wide range of opinions on the improvement of the Board of Directors’ effectiveness and other matters regarding the Board of Directors, in order to work on the improvement of the soundness, transparency, and fairness of management.
MHC, based on the understanding that appropriate involvement of independent Outside Directors is important for resolutions related to nomination and compensation, has established the Nomination Committee and Compensation Committee, of which independent Outside Directors comprise the majority. In addition, from the perspective of enhancing the independence and objectivity of the functions of the Board of Directors and its accountability, MHC assigns independent Outside Directors as the chairpersons of the committees.
The Nomination Committee discusses the appointment of Directors, the succession plan for the President & CEO, knowledge, experience, skills, etc. that the Board of Directors should have, and other matters.
The Compensation Committee regularly monitors MHC Directors’ compensation in comparison with the market standard by using an external specialized agency, and discusses policies, concerning the systems, standards, etc. for officers’ compensation.

Matters Concerning Business Execution

As a company with an Audit & Supervisory Committee, MHC delegates business execution decisions to the Executive Committee, a body that will deliberate and decide on important management matters, within an appropriate scope, and expedites the decision-making process, in order to further strengthen the supervisory functions of the Board of Directors. In addition, MHC has adopted an executive officer system in order to further enhance and invigorate the functions of the Board of Directors by clarifying the responsibilities related to the execution of business.
The Executive Committee is composed of the President & CEO, Deputy Presidents, and Executive Officers separately specified by the President & CEO. In principle, the committee deliberates on matters to be submitted to the Board of Directors in advance in order to facilitate decision-making by the Board of Directors, in addition to holding deliberations and making decisions on important matters, including the business management of the Group.

Status of Audits

Audit & Supervisory Committee

Based on its basic policy of conducting audits that contribute to the establishment of a sound corporate governance framework, the Audit & Supervisory Committee works in close coordination with the Internal Audit Department, departments responsible for internal control functions, and the Accounting Auditor, and conducts effective audits through the following activities.

Major Audit & Supervisory Committee Activities
Deliberations, etc. at the Audit & Supervisory Committee
  • Formulation of an annual audit policy and plans and creation of audit reports
  • Status of business execution by business execution divisions
  • Matters related to business reports, financial statements, etc.
  • Reporting on the Accounting Auditor’s audit plan, the status of audits, and audit results
  • Reporting on the Internal Audit Department’s audit plan, the status of audits, and audit results
Attendance at important meetings
  • Attendance at meetings of the Board of Directors, Governance Committee, etc.
Visits to offices in Japan and overseas
  • Visits to offices of MHC and its Group companies in Japan and overseas
Opinion exchanges with the management team
  • Opinion exchanges with Representative Directors and other management members
  • Opinion exchanges with Group companies’ management members, etc.

Department in Charge of Internal Audits

MHC has established the Internal Audit Department as a department in charge of internal audits. In order to ensure independence and objectiveness, the Internal Audit Department adopts a structure under which its members do not concurrently perform the operations of business execution departments.
The Internal Audit Department systematically implements internal audits based on an annual audit plan, and reports the audit results to the Representative Directors, the Board of Directors, and the Audit & Supervisory Committee.
With regard to findings that require improvement, for which guidance was provided to the organizations subject to audits, those organizations are to report the results of improvement to the General Manager of the Internal Audit Department, and the Internal Audit Department reports the findings to Representative Directors, in order to ensure the effectiveness of the audit.

Accounting Auditor

Accounting audits are implemented by Deloitte Touche Tohmatsu LLC in collaboration with the Audit & Supervisory Committee and the Internal Audit Department, based on an audit agreement, and in conjunction with matters such as the provision of relevant information by the departments responsible for internal control.

Appointment and Dismissal of Directors

In determining an appropriate composition of the Board of Directors, we actively enhance the functions of the Board of Directors through increased diversity by electing persons expected to demonstrate the necessary skills and abilities in light of the respective management environment, while also recognizing and considering the importance of diversity in terms of gender, nationality, race, and other factors.
In addition, if Directors are found to meet the dismissal standards described below, their dismissal is deliberated by the Nomination Committee in a timely manner and decided by the Board of Directors.

Selection Standards

  1. 1Directors and Audit & Supervisory Committee Members should have the mental and physical soundness sufficient to execute business.
  2. 2Directors and Audit & Supervisory Committee Members should be persons who are well respected, possess excellent integrity, and hold themselves to high ethical standards.
  3. 3Directors and Audit & Supervisory Committee Members should have a law-abiding mentality.
  4. 4Directors and Audit & Supervisory Committee Members should be expected to make objective judgments regarding management and have excellent foresight and insight.
  5. 5It is reasonable to consider that the candidates will help strengthen the functions of the Board of Directors in view of their knowledge, experience, abilities, and other competencies.
  6. 6In addition to 1. to 5. above, candidates for Outside Directors should (i) have experience, achievements, and knowledge in their fields of specialization, (ii) be able to contribute to the implementation of appropriate decision-making and management supervision of the Board of Directors, and (iii) be expected to secure the time necessary to fulfill their duties.
  7. 7Candidates for reappointment should have performed roles expected of them during each of their previous assignments.

Dismissal Standards

  1. 1Directors significantly damaged the value of MHC by neglecting their duties.
  2. 2Directors violated laws, Articles of Incorporation, or other regulations/rules of MHC, or conducted an act against public order and/or morals, which caused serious damage to MHC or hindrance to the business of MHC as a result.
  3. 3Directors are deemed to not meet the selection standards for Directors.

Structure of the Board of Directors and Areas of Expertise by Directors

MHC has selected nine areas of skills that the Board of Directors should possess: corporate management, finance, global, sustainability, sales/marketing, IT/DX, finance/accounting, risk management / legal affairs, and talent management. It recognizes the importance of reviewing these areas of skills regularly in light of its management strategies and environment, and thus it will continue to consider this matter at Governance Committee and Nomination Committee meetings.
MHC also recognizes that diversity at the Board of Directors in terms of gender, nationality, race, etc. is important, and proactively works on strengthening the function of the Board of Directors by enhancing diversity.
In determining an appropriate composition of the Board of Directors, MHC believes, as a desirable way of achieving diversity within MHC, that it is necessary to elect desirable persons in consideration of gender, nationality, race, etc., making it a top priority that Directors can demonstrate the necessary skills and abilities in light of the respective management environment.
Currently, it is assumed that MHC’s Board of Directors consists of Directors from a variety of business categories and industries and has an appropriate number of members to ensure a balanced composition of appropriate skills and diversity.
Although no foreign Director has currently been elected, MHC acknowledges that the Board of Directors has been performing a supervisory function, as it has elected several Directors who possess a wealth of international business experience, and has received valuable opinions on global business development.

Changes in the Ratios of the Board of Directors

  Number of Directors Non-executive Directors Independent Outside Directors
April 2021 15 53% 33%
June 30, 2021 15 60% 33%
June 30, 2022 14 57% 36%
June 30, 2023 and beyond 12 67% 42%

Reasons for Selection of Skills

Category Skill Reason for Selection
Matters Related to Overall Management Corporate Management
  • Achieving Our FY2031 Vision, which serves as a milestone toward realizing the Company’s management philosophy, requires accurately identifying materiality (material issues) and addressing them through management initiatives. To that end, we believe it is essential to have the ability to boldly drive company-wide transformation, including SX*1, DX*2, and business portfolio transformation, as well as the ability to oversee these initiatives. We also believe it is essential to have the ability to build and promote systems that support sound corporate management rooted in compliance, as well as the ability to oversee these activities.
  1. *1Sustainability transformation
  2. *2Digital transformation
Finance
  • We believe it is essential to have a deep understanding of the Company’s business as a financial services provider, as well as deep insight into domestic and international finance, and the ability to apply that expertise to the promotion and oversight of the Company’s management and business strategies.
Global
  • The Company operates a wide range of businesses globally, and we believe it is essential to have deep insight into global business, including cross-cultural and geopolitical considerations, as well as the ability to apply that insight to the promotion and oversight of management.
Sustainability
  • We believe it is essential to have the ability to promote and oversee sustainability management, which balances the resolution of social issues with the sustainable enhancement of corporate value.
Matters Related to Earnings Growth Sales/Marketing
  • To strengthen earning power through a shift to high value-added businesses and the development of new businesses, we believe it is essential to have the ability to leverage sales and marketing capabilities to build and promote business strategies such as the evolution and layering of business models, as well as the ability to oversee these activities.
Matters Related to Strengthening Corporate Functions IT/DX
  • To realize the creation and enhancement of customer value through the use of data and digital technology, we believe it is essential to have the ability to apply advanced knowledge of IT and DX to management and its oversight.
Finance/
Accounting
  • We believe that advanced expertise in accounting is essential to support the Company’s globally developed business through effective management and oversight. Furthermore, to achieve sustainable growth, we believe it is essential to have the ability to promote and oversee a financial strategy that balances the three key elements of financial soundness, return on capital, and growth potential.
Risk
Management/
Legal Affairs
  • We believe it is essential to have the ability to build and promote a risk management framework that supports growth strategies through enhanced risk control, as well as the ability to oversee these activities. Furthermore, we believe that advanced expertise in legal affairs is essential to identify key risks in business activities from a legal perspective and to apply that insight to management and its oversight.
Talent Management
  • We believe it is essential to have the ability to build and promote a talent strategy that secures, develops, and utilizes talent in order to fulfill a talent portfolio that supports management strategies and to create a workplace that is both comfortable and motivating. This includes the ability to oversee such activities.

Skills That Should be Possessed by the Board of Directors (Skill Matrix) and Each Committee’s Members

as of June 25, 2026
Name Position Matters Related to Overall Management The members of each Organization
Matters Related to
Earnings Growth		 Matters Related to Strengthening
Corporate Functions
Corporate
Management		 Finance Global Sustain-
ability		 Sales/
Marketing		 IT/DX Finance/
Accounting		 Risk
Management/
Legal Affairs		 Talent
Management		 Board of
Directors		 Audit &
Supervisory
Committee		 Governance
Committee		 Nomination
Committee		 Compensation
Committee
Takahiro Yanai
Director,
Chairman
Applicable
Applicable
Applicable
Applicable
Applicable
Not applicable
Applicable
Applicable
Applicable
Applicable
Not applicable
Applicable
Applicable
Applicable
Taiju Hisai
Representative Director,
President & CEO
Applicable
Applicable
Applicable
Applicable
Applicable
Not applicable
Applicable
Applicable
Applicable
Applicable
Not applicable
Applicable
Not applicable
Not applicable
Aiichiro Matsunaga
Representative Director,
Deputy President
Applicable
Applicable
Applicable
Applicable
Applicable
Not applicable
Not applicable
Applicable
Applicable
Applicable
Not applicable
Applicable
Not applicable
Not applicable
Kazumi Anei
Director,
Deputy President
Applicable
Applicable
Applicable
Applicable
Applicable
Not applicable
Not applicable
Not applicable
Not applicable
Applicable
Not applicable
Not applicable
Not applicable
Not applicable
Kazuyoshi Kawakami
Director,
Managing Executive Officer
Applicable
Applicable
Applicable
Applicable
Not applicable
Not applicable
Applicable
Not applicable
Not applicable
Applicable
Not applicable
Not applicable
Not applicable
Not applicable
Hiroyasu Nakata
Director
(Outside Director)
(Independent Director)
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Applicable
Not applicable
Applicable
Not applicable
Applicable
Applicable
Applicable
Junko Takata
Director
(Outside Director)
(Independent Director)
Not applicable
Not applicable
Applicable
Not applicable
Applicable
Not applicable
Not applicable
Not applicable
Not applicable
Applicable
Not applicable
Applicable
Applicable
Applicable
Shota Kondo
Director
(Outside Director)
Applicable
Not applicable
Applicable
Applicable
Applicable
Not applicable
Not applicable
Not applicable
Not applicable
Applicable
Not applicable
Applicable
Applicable
Applicable
Yoshitaka Shiba
Director, Audit & Supervisory Committee Member
Applicable
Applicable
Not applicable
Not applicable
Applicable
Not applicable
Applicable
Applicable
Not applicable
Applicable
Applicable
Applicable
Not applicable
Not applicable
Hiroko Kaneko
Director, Audit & Supervisory Committee Member
(Outside Director) (Independent Director)
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Applicable
Applicable
Not applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Masayuki Saito
Director, Audit & Supervisory Committee Member
(Outside Director) (Independent Director)
Applicable
Not applicable
Applicable
Applicable
Not applicable
Not applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Applicable
Kayoko Kawamura
Director, Audit & Supervisory Committee Member
(Outside Director) (Independent Director)
Not applicable
Not applicable
Not applicable
Not applicable
Applicable
Applicable
Not applicable
Not applicable
Not applicable
Applicable
Applicable
Applicable
Applicable
Applicable
(Note) ◎: Chairperson, ○: Member

Status of Activities of the Board of Directors, Audit & Supervisory Committee, and Other Committees

Board of Directors

Board of Directors meetings are held every month, in principle. Meetings were held 15 times in FY2025, where important management matters such as the Medium-term Management Plan, major investment projects, business strategies of each business division, and IR activities were deliberated and decided. In addition, the rationality of cross-shareholdings was verified. Furthermore, the status of audit is reported from the Audit & Supervisory Committee in a timely manner.
Important policies and other matters are deliberated at the Board of Directors meetings. The content of matters deliberated by the Executive Committee and its advisory committees regarding risk management, compliance, sustainability, etc. is regularly reported to the Board of Directors.

The main matters deliberated by the Board of Directors in FY2025 are as follows:

Main Matters Deliberated by the Board of Directors
Management strategies
  • Enhancement of corporate value over the medium to long term
  • Medium-term Management Plan (progress of the 2025 MTMP and consideration of the 2028 MTMP)
  • Initiatives to realize management with a focus on capital cost and share price, etc.
Businesses
  • Acquisition of large assets
  • Progress of businesses of each division, etc.
Financial results and dividends
  • Year-end financial results
  • Year-end dividend
  • Annual securities report (details and timing of disclosure), etc.
Governance
  • Policies for cross-shareholdings
  • Details of the Corporate Governance Report
  • Assessment of the Board of Directors’ effectiveness
  • Reports by the Audit & Supervisory Committee, etc.
Human resources and compensation
  • Selection of Representative Directors
  • Skill matrix and selection of Directors
  • Compensation for Directors and Executive Officers
  • Appointments of Executive Officers, etc.
Activity reports by each committee
  • Status of sustainability activities
  • Status of risk management
  • Status of compliance management, etc.

Attendance at the Board of Directors meetings by Directors in FY2025 was as follows:

15/15times (100%) Takahiro Yanai, Taiju Hisai, Aiichiro Matsunaga, Kazumi Anei, Haruhiko Sato, Yuri Sasaki, Kayoko Kawamura, Yoshitaka Shiba, Hiroyasu Nakata, Hiroko Kaneko, Masayuki Saito
14/15 times (93%) Shota Kondo

Audit & Supervisory Committee

Committee meetings are held every month, in principle. Committee meetings were held 14 times in FY2025 where the following matters were deliberated and reported.

Main Matters Deliberated and Reported at the Audit & Supervisory Committee in FY2025
Overall audit activities
  • Formulation of an annual audit policy and plans and creation of audit reports
  • Status of audit activities by the Audit & Supervisory Committee Members designated by the Audit & Supervisory Committee
Departments responsible for internal audits
  • Results of business audits and internal control audits by the Internal Audit Department
Accounting Auditor
  • Appropriateness of the compensation and reappointment of the Accounting Auditor and audit results
  • Progress and results of audits by the Accounting Auditor and processes of determining key audit matters (KAMs)
Departments responsible for internal control functions
  • Status of internal control
  • Matters reported and deliberated at committees (Risk Management, Compliance, Sustainability, IT, Disclosure, ALM, etc.)

Attendance by Directors in FY2025 was as follows:

14/14 times (100%) Yoshitaka Shiba, Hiroyasu Nakata, Hiroko Kaneko, Masayuki Saito

Governance Committee

Committee meetings were held eight times in FY2025, where PDCA was conducted for effectiveness assessment by deliberating the method of effectiveness assessment for the Board of Directors and the analysis of the assessment results. Also, various governance guidelines were comprehensively reviewed, issues at MHC were identified, and multifaceted discussions were held about the composition of the Board of Directors members, the expansion of the roles of Outside Directors, the improvement of the effectiveness of the Board of Directors, and other matters.

Attendance by Directors in FY2025 was as follows:

8/8 times (100%) Takahiro Yanai, Taiju Hisai, Aiichiro Matsunaga, Yuri Sasaki, Kayoko Kawamura, Yoshitaka Shiba, Hiroyasu Nakata, Hiroko Kaneko, Masayuki Saito
7/8 times (88%) Shota Kondo

Nomination Committee

Committee meetings were held nine times in FY2025, which deliberated the reappointment of the President & CEO, the revision of skills that the Board of Directors should possess (skill matrix), etc.

Attendance by Directors in FY2025 was as follows:

9/9 times (100%) Takahiro Yanai, Yuri Sasaki, Kayoko Kawamura, Hiroyasu Nakata, Hiroko Kaneko, Masayuki Saito
8/9 times (89%) Shota Kondo

Compensation Committee

Committee meetings were held eight times in FY2025, which deliberated the policy, the system, and the level of officers’ compensation, the evaluation system for officers’ bonuses, and other matters.

Attendance by Directors in FY2025 was as follows:

8/8 times (100%) Taiju Hisai, Yuri Sasaki, Kayoko Kawamura, Shota Kondo, Hiroyasu Nakata, Hiroko Kaneko, Masayuki Saito

Evaluation of the Effectiveness of the Board of Directors

MHC has continued efforts to further improve the effectiveness of the Board of Directors based on annual reviews and assessments conducted by all Directors at the Board of Directors throughout the year for the purpose of maintaining and enhancing the functions of the Board of Directors.
Major initiatives and an overview of the assessment of the effectiveness of the Board of Directors for FY2025 are as follows:

Major Initiatives in FY2025

Issues in FY2024 Response to Issues
Improving agenda items and the content of deliberations
  • Discussed growth strategies, resource allocation, and other matters that contribute to the enhancement of corporate value over the medium to long term in the process of formulating the 2028 MTMP.
  • Discussed the level and ratio of officers’ compensation in consideration of the optimal incentives in the 2028 MTMP (revisions to KPIs, evaluation weights, etc.).
  • Followed up on important matters and investment projects that posted losses.
  • Verified the effects of the revisions to the criteria for matters to be submitted to the Board of Directors implemented in the previous fiscal year. Reconfirmed the roles and purposes of the Board of Directors and other committees and clarified items for deliberation.
  • Considered further accelerating the disclosure of the annual securities report.
Enhancing communication
  • Held roundtable discussions and opinion exchange meetings attended only by independent Outside Directors.
  • Held opinion exchange meetings between independent Outside Directors and the Chairman and the President & CEO.
  • Held communication sessions between Outside Directors and Executive Officers.
  • Held communication sessions between Outside Directors and the management personnel and employees of overseas Group companies, etc.
Improving information provision system
  • Visits to domestic and overseas offices by Outside Directors.
  • Reporting of the current status of each unit and each business division.

Assessment of the Effectiveness of the Board of Directors in FY2025

Assessment Method

  • At the Governance Committee meeting held in February 2026, the method of assessing the effectiveness of the Board of Directors for FY2025 was discussed. While the necessity of using a third-party organization was considered, it was reaffirmed that in-house effectiveness assessments are more effective in identifying issues based on our vision for the Company.
  • A questionnaire survey on the effectiveness of the Board of Directors, Governance Committee, Nomination Committee, and Compensation Committee was conducted for all Directors. In addition, the secretariat conducted individual interviews with all Outside Directors to understand the background of their opinions and requests, followed by in-depth, one-on-one discussions with the Chairperson of the Board of Directors and the President & CEO regarding the Board’s effectiveness.
  • The Governance Committee deliberated multiple times on the opinions and requests from each Director and the policy for addressing the identified issues, and the Board of Directors assessed the effectiveness of the Board in FY2025.
Assessment Method

Results

The major results of the assessment above are shown below:

  1. ①It was determined that MHC’s Board of Directors is sufficiently performing its role.
    • In the formulation of the 2028 MTMP, the Board of Directors was able to allocate sufficient time to discuss important points, such as the analysis of internal and external environments, measures to drive the enhancement of corporate value over the medium to long term, and key strategies including the restructuring of our business portfolio.
    • Through follow-up on important matters and investment projects that posted losses, the Board of Directors reviewed the background, assumptions, and decision-making criteria at the time of decision-making and obtained lessons and insights to be applied to future investment policies and frameworks, etc.
    • In terms of the Board’s operation, improvements were implemented, including timely and appropriate agenda setting to promote substantive discussions and a review of presentation templates. Initiatives such as discussions among independent Outside Directors only and communication between the Board of Directors and Executive Officers were also evaluated as effective.
  2. ②It was determined that MHC’s Governance Committee, Nomination Committee, and Compensation Committee are sufficiently performing their roles.
    • The Governance Committee steadily advanced measures to address issues identified in the previous year’s effectiveness assessment, while also engaging in discussions on corporate governance and risk management frameworks aimed at strengthening the Company’s earning power.
    • The Nomination Committee discussed the consideration of the skills matrix, the nomination of new Director candidates, etc. while the Compensation Committee discussed increasing the proportion of variable compensation in officers’ compensation as an incentive to enhance corporate value over the medium to long term, as well as the performance indicators and weighting linked to the key performance indicators of the 2028 MTMP.
  3. ③As the issues to address in FY2026, it was confirmed that the Board of Directors will discuss our new 10-year vision and Company-wide themes (such as DX) while continuing to discuss talent development, the role and approach to corporate governance, etc..
    In addition, by continuing to refine operational practices to further enhance the effectiveness of the Board of Directors and the committees, we will further strengthen governance.

Compensation for officers

1. Basic Policy

  • MHC officers’ compensation is designed to enhance corporate value over the medium to long term through the execution of business strategies, and is set at an appropriate level with respect to the roles and responsibilities of each officer by also taking market levels into consideration.
  • Also taking into account incentives for officers, the ratio of fixed remuneration and variable compensation, key performance indicators (KPIs), and their respective weightings are appropriately determined.

According to the basic policy above, MHC’s Board of Directors resolves the policies on the compensation, etc. of individual Directors (excluding persons who are Audit & Supervisory Committee Members).The compensation, etc. of Executive Officers shall be handled in the same manner as the compensation, etc. of Executive Directors.

2. Compensation System

  • In principle, Executive Directors’ compensation, etc., consists of base remuneration, short-term incentive compensation (performance-based monetary compensation), and medium-to long-term incentive compensation (performance-based stock compensation). As short-term incentive compensation, cash is paid as a bonus, while medium-to long-term incentive compensation is paid in MHC’s shares, etc. using a trust framework.
  • To serve as an incentive to enhance corporate value over the medium to long term and business performance over the short term, the ratio of fixed remuneration (base remuneration) to variable compensation (bonus and stock compensation) is set at approximately 1:1 (the ratio of base remuneration to bonus to stock compensation is set at approximately 1:0.5:0.5).
  • MHC uses a BIP (Board Incentive Plan) trust, which is closely linked to the medium- to long-term performance of MHC and high in both transparency and objectivity, as the stock option system. The BIP trust is intended to further increase Directors' willingness to contribute to expanding MHC’s corporate value over the medium to long term, and to share the benefits and risks of stock price fluctuations with shareholders.
  • Bonuses and stock compensation, which represent incentive compensation, are not paid to non-executive Directors (excluding persons who are Audit & Supervisory Committee Members) from the standpoint of ensuring the effectiveness of their supervisory functions, and to Directors who are Audit & Supervisory Committee Members from the standpoint of ensuring the fairness of audits.
  • The amounts of compensation for Directors (Audit & Supervisory Committee Members) shall be decided through discussions among Directors who are Audit & Supervisory Committee Members, within the range resolved at the General Meeting of Shareholders.

Compensation System for Executive Directors

  Type of Compensation Details of Compensation Percentage of Compensation KPIs for Evaluation/
Evaluation Weight		 Range of Payment Coefficient Based on KPI Achievement
Fixed Base Remuneration
  • Fixed remuneration according to position
 50% 1 - -
Variable Bonus
(Short-term Incentive)Performance-based
  • Amount determined based on the consolidated business performance of the previous year,etc.
  1. 1KPIs for performance evaluation are set in line with MHC's numerical targets
  2. 2The level of achievement of responsible duties is evaluated quantitatively and qualitatively from the perspective of performance and the level of contribution
 25% 0.5 KPI＼Position Representative Director Other

0 - 150%
ROE*1 40% 28%
ROA*2 30% 21%
Net Income Attributable to Owners of the Parent 30% 21%
Responsible Duties - 30%
Stock
(Medium- to Long-term
Incentive)Performance-based
  • Amount determined based on the level of achievement during the three-year period of the Medium-term Management Plan
 25% 0.5 ROE*1 30%

0 - 150%
ROA*2 20%
Net Income Attributable to Owners of the Parent 20%
TSR against TOPIX growth rate*3 10%
GHG Emissions vs. FY2019
(Scope 1, 2)*4		 10%
MHC Engagement*5 10%
  1. *1Return on equity
  2. *2Return on assets
  3. *3Total shareholder return
  4. *4The FY2028 target has been set as a milestone for achieving the FY2050 net-zero target, based on a constant linear decrease from the FY2024 result.
  5. *5Percentage of organizations achieving a high score level in the employee engagement survey results
    (percentage of organizations where more than half of the respondents gained high scores for both initiative and diversity)

Composition of Compensation

Composition of Remuneration

Malus and Claw-back Clause for Stock Compensation and Shareholding Policy

  • As for stock compensation, the points or share conversion points that have already been granted can be confiscated, and money equivalent to MHC’s shares, etc. that have already been delivered reclaimed, in the case of a material violation of the office regulations or internal regulations, resignation for personal reasons during the term of office against the will of MHC, dismissal for justifiable reasons, gaining employment at a competitor without MHC’s permission, etc.
  • MHC recommends the holding of its shares by its Directors. Further, in principle, Directors shall continue to hold MHC’s shares obtained during the term of their office until the time of their resignation, regardless of the number of shares held.

Policy for Constructive Dialogue with Shareholders

With the recognition that it is one of its social responsibilities to ensure transparent and sound management while emphasizing initiatives to achieve sustainable corporate growth and the enhancement of its corporate value over the medium to long term, MHC pursues proactive and constructive dialogue with shareholders and investors.
With the Corporate Communications Department serving as the primary point of contact, MHC has established a system for collaboration with the Corporate Planning Department, Accounting Department, General Affairs Department, Human Resources Department, etc. to implement the following initiatives.

  • Financial results briefings are held quarterly each year, in which the President & CEO and management provide explanations and also answer any questions that are asked.
  • MHC’s management and the Corporate Communications Department conduct individual interviews with domestic and foreign shareholders and institutional investors, and IR and SR activities, such as participation in briefings and various conferences.
  • MHC provides a wide range of information such as videos of financial results briefings and materials with scripts provided at the briefings, and summaries of Q&A sessions held at the briefings to stakeholders, including individual investors, on our website. In conjunction with this, MHC participates in IR events and various briefings for individual investors which are organized by securities companies and stock exchanges.

Opinions and concerns expressed in the dialogue with shareholders are promptly reported to MHC’s management. In addition, those are regularly reported to the Board of Directors so that the information is shared with independent Outside Directors as well. MHC appropriately and carefully manages insider information in accordance with MHC’s internal rules and also discloses such information in accordance with the Information Disclosure Policy. Please refer to our website for the Information Disclosure Policy:

Cross-shareholdings

1. Policies for Cross-shareholdings

Under the corporate policy for enhancing its corporate value, MHC holds listed stocks for the purposes of ① and ② below:

  1. ①Developing stable and long-term relationships with business partners and promoting business
  2. ②Strengthening such relationships based on capital and business alliances, and creating new business opportunities

In its cross-shareholding practice, MHC’s basic policy is to regularly examine if it is rational to hold each stock and sell those that are judged no longer rational to hold, after gaining understanding of its business partners while considering the impact of selling stocks on businesses and markets.
Even when it is judged as rational to hold stocks, MHC may sell such stocks in consideration of the impact of the risk of mark-to-market valuation fluctuation of the stocks on MHC’s finances, capital efficiency, etc.
The change in the number of listed stocks held since March 31, 2016 is as follows. The number decreased from 134 to 19 as of March 31, 2026.

Change in the Number of Listed Stocks (Companies)
Change in the Number of Listed Stocks
  • *The numbers for March 2016 to March 2021 are the combined totals of those from the former Mitsubishi UFJ Lease & Finance and Hitachi Capital.
    The numbers for March 2017 to March 2021 do not include the numbers of stocks cross-held by both companies.

2. Method for Verifying the Rationality of Cross-shareholdings

MHC’s cross-shareholding policy is decided based on ① and ② below and its rationality is verified at the Board of Directors. (See the figure below.)

  1. ①A quantitative evaluation based on factors including the amounts of business transactions and profits, dividends received, and the cost of equity
  2. ②A qualitative evaluation of the business activities to date and potential business opportunities in the future
Method for Verifying the Rationality of Cross-shareholdings

3. Verification of Rationality by the Board of Directors

The Board of Directors examined the listed stock using the method outlined in 2. above at the Board of Directors meeting held in FY2025.

4. Basis for Exercising Voting Rights

MHC exercises its voting rights for cross-shareholdings in light of the purposes described in 1. above.
Concerning the following agendas which may affect the enhancement of corporate value and the sustainable growth of MHC and its business partners over the medium to long term, MHC exercises its voting rights after carefully verifying their details and potential impact:

  • Agenda on the disposal of surplus
  • Agenda on the election of Directors and auditors
  • Agenda on organizational restructuring
  • Agenda on anti-takeover measures, etc.

Corporate Governance Report