Persol : Corporate governance report

Corporate Governance

Please note that the following is an unofficial English translation of the Japanese original text of the Corporate Governance Report of PERSOL HOLDINGS CO., LTD. which has been reported to the Tokyo Stock Exchange. PERSOL HOLDINGS CO., LTD. provides this translation for reference and convenience purposes only and without any warranty as to its accuracy or otherwise. In the event of any discrepancy between this translation and the Japanese original, the latter shall prevail.

Last updated:	June 22, 2022
PERSOL HOLDINGS CO., LTD.
Representative Director, President and CEO Takao Wada
Contact: Department in charge	Governance Department:
		[phone]
		Securities code: 2181

https://www.persol-group.co.jp/en/

The status of corporate governance at PERSOL HOLDINGS CO., LTD. is as follows:

I. Basic approach to corporate governance, capital structure, corporate attributes, and other basic

information

1. Basic Approach

(Principle 2.1, 2.2, 3.1(i), 3.1(ii))

Providing Opportunity, Individual Growth and Social Contribution

Work, and Smile

Authentic (Respond every issue sincerely)

Customer-Focus (Always be a reliable partner and strive to go beyond our customer's expectations) Professional (Have high spirit and keep on shining)

Teamwork (Respect the diversity and maximize the achievement of organizations) Innovative (Think, Act and Joy in changing)

PERSOL HOLDINGS CO., LTD. (hereinafter referred to as "the Company") establishes the basic management policy and the corporate strategies of the entire group with the aim of realizing its corporate philosophy. Each of the group companies shall promote sustainable corporate growth and the increase of corporate value over the mid- to long-term and solve social issues through its businesses by executing the corporate strategies in united efforts of the group companies.

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Corporate Governance

Based on this Basic Approach, the Company established the "Corporate Governance Guideline". This Corporate Governance Guideline lays out the principles and desirable state of corporate governance of the Company and serves as the Guideline for the directors and the Group Senior Executives (collectively referring to the Representative Director, President and CEO, executive directors and executive officers, who are responsible for the management of the Company and its group companies) towards the realization thereof. We will take actions in line with the Guideline and revise it as necessary in response to changes in the times and circumstances and consistently strive for better corporate governance.

The Corporate Governance Guideline is posted on our website:

https://www.persol-group.co.jp/en/images/corporate/governance/corporate_governance_guideline_en.pdf

[Reasons for not putting each principle of the Corporate Governance Code into practice]

The Company has applied each of the basic principles of the Corporate Governance Code.

[Releases based on Corporate Governance Code principles]

1.Corporate Philosophy and Corporate Governance Guideline (Principle 2.1, 2.2, 3.1(i), 3.1(ii)) Described in I.1 "Basic Approach" of this report.

2.Business strategy & business plans (Principle 3.1(i))

We recognize the increasing social expectations and responsibilities for our Group in a rapidly changing work environment associated with longer careers due to the advent of 100-year lifespans and work style changes stemming from advances in technology and artificial intelligence.

Under these circumstances, to fulfill our Group Vision, "Work, and Smile," we have designed a cycle of corporate activities and social contributions, which forms a value creation story looking ahead to 2030.

We will determine our commitments to a changing society, refine the sources of value creation we have amassed, and use these to drive growth in our business activities.

As a consequence, we will enhance both our social and economic values to create new value. At the same time, we will contribute to achievement of SDGs (Sustainable Development Goals) adopted by the United Nations.

The focus of our Group Mid-term Management Plan 2023, which covers the first three years leading to 2030, is on refining our businesses and reinforcing our management base with a view to further growth. By fulfilling our "Work, and Smile" vision, we will provide value to society.

Details on our Medium-term Management Plan is posted on our website: https://www.persol-group.co.jp/en/ir/strategy/index.html

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Corporate Governance

3. Policy on constructive dialogues with shareholders and investors, and capital policy

1. Policy on constructive dialogues with shareholders and investors (Principle 5.1, Supplementary principle 5.1.1, 5.1.2)
   From the perspective of sustainable growth and enhancing corporate value over the medium to long term, the Board has established "Policy for Constructive Dialogue with Shareholders and Investors," and we will actively promote dialogue with shareholders and investors.
   Policy for Constructive Dialogue with Shareholders and Investors is posted on our website: https://www.persol-group.co.jp/en/corporate/governance/corporate_governance/
2. Cross-Shareholdings(Principle 1.4)

1.Basic Policy Regarding Cross-Shareholdings

From the perspective of avoiding risk from share price fluctuations and improving capital efficiency, the Company does not hold listed shares except in cases where it is necessary for business or financial transactional relationships with the investee or collaboration with the Company.

2.Basic Policy/Standards of Verification

The Board periodically verifies the appropriateness of holding individual cross-shareholdings. Following consideration of the business advantages and strategic significance in maintaining relationships, expanding transactions and creating synergies, and the general verification of whether the benefits and risks pertaining to such shareholdings correspond to the Company's cost of capital, cross-held shares judged as unnecessary to hold will be prepared for sale after taking into consideration the status of the cross-shareholders, etc.

As a result of verification, some cross-held shares deemed as unnecessary to hold has been sold.

3.Basic Policy on Exercising Voting Rights

The Company will make appropriate decisions regarding the exercise of voting rights in corporations forming cross-shareholdings by comprehensively considering whether or not the details of resolution items contribute to enhancing the value of said corporation in which shares are held, as well as the status of said corporation`s corporate governance structures, and compliance systems etc.

4. Structure of the Board and policies and procedures when appointing the Group Senior Executives and in the nomination of Director candidates by the Board

1. The form of organizational structure (Principle 4.10)

Based on the corporate governance principles, the Company has adopted the form of organizational structure of "Company with Supervisory Committee" under the Japanese Companies Act. Furthermore, for the purpose of complementing the function of the Board, the Company has

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Corporate Governance

established a Nomination and Compensation Committee and a Corporate Governance Committee as voluntary committees to increase transparency and objectivity concerning decisions on the nomination and compensation of the directors and the Group Senior Executives.

(2) Separating the oversight and management (Principle 4.6)

The Board is responsible for the oversight of management and its main roles and responsibilities are to set the basic management policy, oversee the Group Senior Executives, and secure the construction and operation of appropriate internal control systems. For the purpose of enabling management to make timely, flexible and decisive decisions, management decisions other than those reserved for the Board by the Companies Act shall be delegated, in principle, to the CEO. Provided, however, that the decisions on the execution of important operations set forth in the Regulations for the Board shall be made by the Board.

(3) Scope of delegation to management (Supplementary principle 4.1.1)

As stated in "Chapter 8. Management Structure (8-1. Management Structure and 8-2. Duties of the CEO)" of the Corporate Governance Guideline.

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＜Excerpt of the Corporate Governance Guideline＞

8-1. Management Structure

The Company adopts the Executive Officer system with the purpose of separating the oversight and management and clarifying where management responsibility lies.

In addition, Headquarters Management Committee (hereinafter referred to as, "HMC") is established to assist the CEO in making decisions on the group's basic management policy and important operations. The decisions on the execution of important operations delegated to the CEO by the Board shall be decided by the CEO on the condition that the HMC has made an affirmative resolution. Based on the concept that the members of the HMC (hereinafter referred to as, "the HMC members") shall be the persons who assume the significant decisions on the execution of important operations delegated by the Board and comprehensive roles as members of the senior management of the group, a proposal for the nomination of a HMC members shall be prepared by the CEO from among the executive officers, and shall be approved at the Board upon deliberation at the Nomination and Compensation Committee.

The responsibilities and authorities of the HMC, the CEO and the executive officers in charge shall be clarified in the Delegation of Authorities Rules.

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Corporate Governance

8-2. Duties of the CEO

The CEO shall make decisions on the execution of operations to realize the group's corporate philosophy and increase corporate value and the common interests of stakeholders including shareholders and demonstrate necessary leadership.

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(4) Composition of the Board (Principle 4.8, Supplementary principle 4.11.1)

As stated in "Chapter 5. Composition of the Board (5-1. Composition of the Board)" of the Corporate Governance Guideline.

Based on a governance policy of separating oversight and management, and further strengthening the supervisory function of the Board of Directors, as well as accelerating decision- making, the Board has been composed of seven Directors who are not Supervisory Committee Members (four of whom are Independent Directors) and three Directors who are Supervisory Committee Members (two of whom are Independent Directors), and the ratio of Independent Directors is at least one-half of the total following the Ordinary General Meeting of Shareholders held on June 21, 2022.

Combination of the Skills (knowledge, experience and capability) that the board of Directors should have based on the Mid- to Long-term Strategic Policy and the roles of the Board, and the skills that Directors possess is posted on our website:

https://www.persol-group.co.jp/en/images/corporate/governance/skills_matrix_en.pdf

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＜Excerpt of the Corporate Governance Guideline＞

5-1. Composition of the Board

The Board shall comprise of not more than 15 directors to ensure the effectiveness of its functions, and independent directors shall account for a half or more so that they are able to properly perform their oversight functions.

The Board shall have well-balanced knowledge, experience and capability as a whole to effectively fulfill its roles and responsibilities and shall be composed in a form in which diversity including gender and internationality exists and the right size is maintained.

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1. Policies and procedures when appointing/dismissing the Group Senior Executives and nominations of Director candidates by the Board (Principle 3.1, Supplementary principle 4.11.1)
   As stated in "Chapter 5. Composition of the Board (5-2. Nomination of Directors)" of the Corporate Governance Guideline.

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