Corporate Governance

Report 2021

Recruit Holdings Co., Ltd.

Corporate Governance

CORPORATE GOVERNANCE REPORT

Last Update: December 13, 2021

Recruit Holdings Co., Ltd.

Hisayuki Idekoba, President, CEO, and Representative Director Contact: +81-3-6835-1111 TSE Code: 6098 https://recruit-holdings.com/

This Corporate Governance Report ("Corporate Governance Report" or the "Report") discusses the status of corporate governance in Recruit Holdings Co., Ltd. with reference to the Principles and Supplementary Principles provided in Japan's Corporate Governance Code (the "Corporate Governance Code").

https://www.jpx.co.jp/english/news/1020/b5b4pj0000046kxj-att/b5b4pj0000046l07.pdf

In this Report, the terms the "Company," "Recruit Group," "we," and "our" refer to Recruit Holdings Co., Ltd. and its consolidated subsidiaries unless the context indicates otherwise. The "Holding Company" refers to Recruit Holdings Co., Ltd. ("Recruit Holdings") on a standalone basis.

The Company's fiscal year starts on April 1 and ends on March 31 of each year. Accordingly, "FY2020" refers to the period from April 1, 2020 to March 31, 2021. References to "FY" or "fiscal year" for prior and subsequent are to 12-month periods commencing in each case on April 1 of the year indicated and ending on March 31 of the following year.

Basic Policy on Corporate Governance

Management Philosophy

The management philosophy of the Company is expressed in its Basic Principle, Vision, Mission and Values:

Basic Principle

We are focused on creating new value for our society to continue to a brighter world where all individuals can live life to the fullest.

Vision

Follow Your Heart

Mission

Opportunities for Life.

Faster, simpler and closer to you.

Values

Wow the World

Bet on Passion

Prioritize Social Value

Guided by Recruit Group Management Philosophy, the Board of Directors prioritizes corporate governance policies and practices that are designed to achieve long-term growth, increased corporate and shareholder value, and benefits for all of our stakeholders. Our stakeholders include employees, individual users and

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business clients, as well as our shareholders, business partners, non-profit organizations (NPOs) and non-governmental organizations (NGOs), national and other governments, and local communities.

In order to further enhance corporate value in the future, the Company believes it is important to prosper together with all stakeholders through all corporate activities with a sound governance foundation. Therefore, the Company has redefined its commitment to sustainability as well as setting ESG targets, and defines corporate governance as one of our material foundations for our corporate activities, and prioritizes related initiatives.

The contents of this report comply with the revised Corporate Governance Code published by the Tokyo Stock Exchange on June 11, 2021. The Board of Directors is recognized as being in compliance with all items of the Corporate Governance Code. In this Corporate Governance Report, moreover, in addition to items for which mandatory disclosure is indicated in the Corporate Governance Code, the Board of Directors has stipulated the policy that other principles and supplementary principles relevant to the Company are to be disclosed to the extent possible.

The above section complies with Corporate Governance Principles 2-1,3-1(ii).

Company Goals and Strategies

The Company strives to maximize enterprise value and shareholder value by responding to the rapidly transforming technology and internet landscape and by identifying business opportunities globally. Through HR Technology, HR Solutions in Media & Solutions and Staffing, the Company aims to dramatically improve matching between job seekers and employment opportunities within the HR Matching market. Also, through SaaS solutions provided by Media & Solutions, the Company strives to improve the business performance and productivity of clients' businesses.

In an environment of high uncertainty, the Company believes that making a positive impact on society and this shared planet is key to achieving sustainable growth, and prospering together with all stakeholders through all corporate activities with a sound governance foundation is important. Therefore, the Company has set specific targets for environmental, social and governance (ESG) matters as a corporate strategy which will be monitored by the Board of Directors, and will take initiatives through dialogue with stakeholders.

Please visit the Company website for the details.

The Earning Release for FY2020 disclosed in May 2021: https://recruit-holdings.com/ir/library/upload/report_202103Q4_er_en.pdf

To implement the management strategy described above, the Company has established a corporate framework within which the Company could best continue to grow globally while meeting the challenges of a constantly evolving worldwide technology-focused business. In April 2018, the Company was reorganized and established a managing entity called SBU Headquarters, which manages the subsidiaries of each Strategic Business Unit (SBU). The focus of this reorganization was to create an operating environment in which the Company could execute transactions for expansion, divestitures, and reorganization of the business portfolio in the most expedient manner possible.

On April 1, 2021, Recruit Co., Ltd., the headquarters of Media & Solutions SBU, integrated its wholly-owned seven core operating companies and functional companies into Recruit Co., Ltd. Recruit Co., Ltd. aims to implement management strategy, while strengthening corporate governance functions in Media & Solutions SBU.

The Board of Directors values constructive dialogue with shareholders on a range of issues, including the Company's strategies. In its discussions of mid- to long-term strategies, the Board of Directors reviews and makes effective use of feedback from shareholders.

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To ensure that management is focused on implementing the mid- to long-term strategy, the Company's compensation plans for internal Directors of the Board and Corporate Executive Officers incorporate performance indicators which reflect financial performance goals and shareholder value.

The Board of Directors and management are committed to using the Company's capital efficiently to achieve sustainable growth and increase the enterprise value of the Company over the long term. To that end, they closely monitor the Company's cost of capital and assess growth opportunities against their prudently established targets for return on investment and equity. The Company sets its ROE target at approximately 15%, aiming to achieve capital efficiency above the cost of shareholders' equity on a consolidated basis. When evaluating each investment opportunity, management and the Board of Directors apply a hurdle rate exceeding the cost of capital.

The section above complies with Corporate Governance Principles 3-1 (i) and 5-2 and Supplementary Principles 4-1-2 and 5-2-1.

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Disclosure Based on Principles of the Corporate Governance Code

The Company has adopted the following policies based on the five general Principles of Japan's Corporate Governance Code.

Securing the Rights and Equal Treatment of Shareholders

The Company recognizes the Shareholders Meeting as the Company's highest decision-making body. The Shareholders Meeting serves as an opportunity for shareholders to express their views on the Company's strategy and goals, and the Board of Directors engages in constructive dialogue with shareholders so that their opinions are properly taken into account.

To ensure the fair and equal treatment of shareholders and to foster an appropriate environment for shareholders to exercise their voting rights, the Company implements the following measures:

  • Early delivery of the Notice of Shareholders Meeting to allow enough time for a thorough understanding of the status of the business
  • Posting of the Notice of Shareholders Meeting electronically in Japanese and English prior to sending it by mail
  • Allowing voting by mail and the Internet for those who are unable to attend the Shareholders Meeting

The Company is committed to disclosing all information that will help shareholders cast informed votes at the Shareholders Meeting. Its disclosures relating to the Shareholders Meeting agenda go beyond what is legally mandated.

The Company facilitates shareholder activity in accordance with the "Share Handling Rules" which stipulate methods for shareholders to exercise their rights effectively. The methods include requests to view the shareholder registry or Board of Directors meeting minutes, the shareholders' right to make proposals at the Shareholders Meeting, the ability to bring a cease and desist order or file a shareholder class action in case of violation of law by a Director of the Board, and other rights of minority shareholders recognized in the Companies Act of Japan.

The above section complies with Corporate Governance General Principle 1, Principles 1-1, and 1-2 and Supplementary Principle 1-1-3 and 1-2-1.

Appropriate Cooperation with Stakeholders Other Than Shareholders

The Company considers all of its stakeholders to be important, including not only its shareholders but also its employees, individual users, business clients, business partners, non-profit organizations (NPOs) and non-governmental organizations (NGOs), national and other governments, and local communities. The Company aims to realize its Basic Principle and create corporate value for all the stakeholders in a sustainable manner.

In order to achieve the Basic Principle, the Board of Directors and Corporate Executive Officers consider it important to realize a continuous cycle of long-term business growth and contribution to society through the business. Dialogue with stakeholders is reported to the Board of Directors, and the Board of Directors and Corporate Executive Officers incorporate their inputs into our management strategies and goals.

The committees, which were voluntarily established as advisory bodies to the Board of Directors, hold discussions regarding stakeholders. Each committee reports to the Board of Directors on stakeholder engagement topics, including stakeholder input for the following:

  • Policies and proposed actions for promoting a compliance mindset from the Compliance Committee
  • Key risk themes from the Risk Management Committee
  • Policies on sustainability actions from the Sustainability Committee

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Recruit Holdings Co. Ltd. published this content on 13 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 December 2021 06:25:12 UTC.