Status of External Executives

By appointing external directors and external Audit & Supervisory Board members who have no special-interest relationships with the Company and are highly independent of the Company, the Company aims to reinforce its corporate governance and augment the Group's overall management quality.
The Company has formulated the Standards for the Independence of Independent Outside Executives shown below.
The above-mentioned external directors and external Audit & Supervisory Board members satisfy these standards and the Tokyo Stock Exchange's independence criteria. The Company has notified the Tokyo Stock Exchange that all of these executives are independent executives.

Standards for the Independence of Independent Outside Executives

The Company has formulated the following standards related to independence with respect to its selection of candidates as independent outside executives (external directors and external Audit & Supervisory Board members designated by the Company as independent outside executives).

Further Information

Candidates must satisfy the various conditions for external directors and external Audit & Supervisory Board members based on the Companies Act. Individuals to whom additionally none of the following apply are considered to satisfy the Company's independence standards.

  1. A person executing the business (*1) of the Company or an affiliated company (*2) of the Company (below, referred to collectively as the "Mandom Group")
  2. An entity that is a major supplier (*3) of the Mandom Group or a person executing the business (*1) of such an entity
  3. A major customer of the Mandom Group (*4) or a person executing the business (*1) of such a partner
  4. A major shareholder that holds 10% or more of the total voting rights of the Company, either directly or indirectly, or a person executing the business (*1) of such a shareholder
  5. An entity in which the Mandom Group holds 10% or more of the total voting rights, either directly or indirectly, or a person executing the business (*1) of such an entity
  6. An entity that has received annual donations of ¥10 million or more from the Mandom Group in the most recent business year or an entity that belongs to such a corporation or other organization
  7. A consultant, accountant or legal professional who receives a large amount of monetary consideration or other property (*5) other than executive compensation from the Mandom Group (or, if the party receiving such property is a corporation or other organization, a person who belongs to that organization)
  8. A person who belongs to the audit firm that is independent auditor for the Mandom Group
  9. If a person executing the business (*1) of the Mandom Group serves as an external executive of another company, a person executing the business(*1) of that company
  10. People to whom item 1 above has applied in the past
  11. People to whom one of items 2 to 9 has applied in the past year
  12. The spouse, second-degree or closer relative, cohabiting relative or person who shares the livelihood of any of those below
    1. A director, Audit & Supervisory Board member or important person executing the business (*6) of a company in the Mandom Group
    2. A person to whom the above items 2 to 5 or 9 apply (if a person executing business, only if an important person executing the business (*6))
    3. An individual or, if a person who belongs to a company or other organization, an important person executing the business (*6), to whom the above item 6 applies
    4. An individual or, if a person who belongs to a company or other organization, an important person executing the business (*6), to whom the above item 7 applies
    5. A certified public accountant and important person executing the business (*6) belonging to an audit firm to which the above item 8 applies
*1

Person executing business: A director (excluding external director), trustee (excluding external trustee), operating officer, corporate operating officer or employee executing operations for a company or other organization

*2

Affiliated company: An affiliated company as provided in Article 2-3-22 of the Ordinance on Company Accounting

*3

Entity that is a major supplier of the Mandom Group:

  1. A business partner group (business partner or its affiliated company (*2)) that provides products or services to the Mandom Group, with such business partner group providing to the Mandom Group in the most recent business year products or services that account for more than 2% of that business partner group's consolidated net sales in the most recent business year or the current business year
  2. A business partner group whose financing provided to the Mandom Group as of the close of the most recent business year exceeds 2% of consolidated total assets of the business partner group as of the end of its most recent business year
*4

Major customer of the Mandom Group:

  1. A customer to which the Mandom Group provides products or services and for which the products or services provided by the Mandom Group account for more than 2% of consolidated net sales of the Mandom Group in the most recent business year or the current business year.
  2. A business partner group to which the Mandom Group provides financing that exceeds 2% of consolidated total assets of the Mandom Group as of the close of the most recent business year
*5

Large amount of monetary consideration or other property:
For an individual, monetary consideration or other property corresponding to ¥10 million or more per year; if a company or other organization, monetary consideration or other property corresponding to 2% or more of that organization's total annual revenue

*6

Important person executing the business: Persons executing the business in item (*1) above who are senior executives (general manager class) or higher

Message from External Director

External Director Hitoshi Tanii

Profile

Q1. You have been an external director for two years. What changes have you seen in Mandom since your first appointment and what challenges do you see for the future?

It has already been two years since I assumed the position.
Amidst the COVID-19 pandemic that has been continuing since I took office, the directors and executive officers are working as one to consider how we can be dedicated to service in this era. The COVID-19 pandemic has not only had an economic impact on our company, but it has also caused us to rethink how we should be. What I mean by this is that there is an argument that our recent disappointing performance is not due to the COVID-19 pandemic, but rather to our inability to provide value to our customers in an intrinsic way. I think there is very sound argument here, and I think it is characteristic of Mandom.
The loyalty of our employees to Mandom has not changed, and expectations toward the new president remain high. I believe that the combination of the chairman, who has long-term experience, and the president, who has new ideas and energy, is very well-balanced and has a promising future. The president has willingly engaged in discussions with employees on the front lines.
On the other hand, however, there are some real challenges. We have not produced any new products that will support the Company's future in recent years. When hit products are not produced for a long period of time, people become impatient and companies then tend to launch new products just for the sake of doing so in rapid succession, based on shallow discussions and deliberations. From my personal point of view, I think it is necessary to reorganize the brand structure rather than just aiming for a hit with a single product.
In particular, the Gatsby brand has a broad product lineup and a wide range of customer ages. This is actually preventing the brand from gaining strong support from the consumer segment, which is the core of the brand's target.
Reinforcing the brand is an essential requirement as a source of long-term competitiveness in the future. I hope that Mandom's strong marketing capabilities will be demonstrated without holding back.

Q2. You assumed the chairmanship of the Nominating Committee and the Compensation Committee last fiscal year (ended March 31, 2022). Please tell us about the status of each committee and any issues that you think need to be addressed.

From last fiscal year (ended March 31, 2022), the chairmanship of the Nominating Committee and the Compensation Committee was transferred to an external director. I think this is a wonderful thing from the standpoint of transparency and soundness of management.
Each member of the committees has been active in speaking out. We have a very open and flat corporate culture that allows us to speak frankly about what is good for the Company, and I believe that this corporate culture is working positively in these committees as well.
In terms of the issues discussed by the committees, I think that in the future it will be necessary to link the compensation of directors and managing executive officers to business performance in a more balanced manner than has been the case to date.
We are also discussing diversity in the composition of the Board of Directors, with a focus on external directors. Currently, our external directors have a well-balanced composition of people with diverse backgrounds, including experience in large company management, experience related to technology and production, women, stock market perspectives, and experience in startup management, and I also believe that knowledge of overseas markets will be required in the future.

Q3. The Company's financial results have been challenging, with two consecutive fiscal years posting a loss. What are your aspirations for future growth?

The president has set a goal for the current fiscal year (ending March 31, 2023) of achieving a return to profitability in terms of profit at each level, and the entire company is united in striving to achieve this goal. As an external director, I would like to contribute to the achievement of this goal by engaging in sound discussions with the directors and executive officers.
The Company has the DNA of having overcome several business crises on our own. Although we are currently in a difficult situation, with two consecutive fiscal years of losses, I am confident that the Company will demonstrate its DNA without holding back and start on the path of renewed growth.