About the Board of Directors

In accordance with the provisions of the company law, the Company shall determine the candidates Director Nominating Committee. The size, structure, aptitude, and independence of the independent Director of the Board of Directors, which should be considered in determining the Director candidate, are stipulated in article 2 and 5 of the company's Corporate governance guidelines:

• Given the need for diversity of the Board views and efficiency of the Board, the number of directors shall be no more than 20, diversity in the experience and expertise, etc. possessed by the director candidates, the composition ratio between outside directors and other directors (directors concurrently serving as executive officers and non-executive directors from within the Hitachi Group), and other such matters in order to ensure the effectiveness of the management supervision and decision-making functions of the Board.
• Consider the period of time since the candidate's assumption of office as the Company's director and the candidate's age to keep bringing fresh ideas and viewpoints regularly to the Board.
• In principle, a person will not be nominated as a director candidate after his or her 75th birthday. However, in special circumstances, a person over 75 years old may be nominated as a director candidate if the Nominating Committee approves. Also, in principle, the Nominating Committee will not nominate a person as an independent director candidate if a person has reached 10 years of total tenure. However, in special circumstances, a person with the total tenure of 10 years or more may be nominated as an independent director candidate, but even in this case, a person with the total tenure of 12 years or more can no longer be nominated as an independent director candidate.

In nominating a director candidate, the Nominating Committee shall consider that:

1. such nominee has the highest personal and professional ethics, integrity and insight; and
2. such outside director nominee has distinguished records of leadership or experience at policy making levels in business, law, administration, or accounting, etc., in addition to satisfying the criteria for independency.

The Nominating Committee considers an outside director to be independent unless:

The composition of the Board of Directors elected based on the above, and the experiences and insights, and skills of each director are as follows.
At Board of Directors, discussions are conducted from a variety of perspectives by directors possessing a wealth of experience and knowledge pertaining to management, risk management, legal affairs, accounting, government, international and educational organaizations, sastainability and digital initiatives at global corporations.

The Board of Directors approves the basic management policy for the Hitachi Group and supervise the execution of the duties of executive officers and directors in order to sustainably enhance corporate value and shareholders’ common interests. The basic management policy includes the Management Plan and annual budget compilation. The Board of Directors focuses on strategic issues related to the basic management policy, as well as other items to be resolved that are provided in laws, regulations, the Articles of Incorporation, and the Board of Directors Regulations.

In fiscal 2024, in addition to reporting on the progress of the Mid-term Management Plan 2024, in the course of making multiple reports to the Board of Directors on the status of discussions concerning the formulation of Inspire 2027, we held many discussions on the ideal state the Hitachi Group should aim for in the future and the business strategies that would make that possible. We also widely discussed and deliberated on risk management pertaining to generative AI, and responses to geopolitical risks in light of recent world affairs.

Aside from these strategic discussions on basic management policies and risk-related discussions, recognition is shared between the supervisory and executive sides of management by reporting to the Board of Directors on important topics discussed in the Senior Executive Committee, an advisory body to the President & CEO, in order to promote discussion. To facilitate more lively discussion on these topics, more time is allotted to exchanging opinions than explaining each topic.

In fiscal 2024, in addition to deciding on the content of the proposal regarding the election of Directors to be submitted to the general meeting of shareholders, the Nominating Committee decided on a proposal for the appointment of the CEO to be submitted to the Board of Directors, discussed future candidates to succeed the CEO, and received and confirmed a preliminary report on the Executive Officer structure for fiscal 2025. In addition, to develop management-level leadership candidates, the members of the Nominating Committee held discussions and conducted one-on-one interviews with leadership candidates.

In fiscal 2024, the Nominating Committee held 9 meetings.

In fiscal 2024, the Audit Committee focused on reviewing the establishment and operation of internal control systems from the perspectives of strengthening the tripartite audit system (Audit Committee, Internal Audit Office, and accounting auditor), risk management, and the appropriateness of the execution of duties. In terms of specific efforts to strengthen the tripartite audit system, the Audit Committee received reports on audit plans and audit results from the Internal Auditing Office and, when necessary, provided instructions on key audit items. The Audit Committee also received reports and explanations from the accounting auditor regarding audit plans and audit results, and verified the results of the financial statement audit and internal control audit based on them. In addition, the Committee received reports and explanations regarding the accounting auditor’s quality control system, and gave prior approval for compensation for the accounting auditor. The Committee also received regular reports from the executive side on risks, issues, and opportunities in each division, and visited Group locations to conduct investigative activities. Furthermore, a standing committee member worked to obtain information as needed in a timely and accurate manner, mainly by attending important internal meetings such as the Senior Executive Committee, and facilitated information sharing with other committee members.

In fiscal 2024, the Audit Committee held 13 meetings.

The Company evaluates the effectiveness of its Board of Directors as a whole each year, in a continuous effort to maintain and improve its functions.