Sompo Holdings’ Unique Corporate Governance

The Sompo Group places great importance on strengthening relationships of trust with all stakeholders by constantly improving transparency and fairness of corporate governance and fulfilling its corporate social responsibility. The Board of Directors of Sompo Holdings formulated the Corporate Governance Policy to clarify basic policies regarding the formation of the overall vision for the Company’s governance structure and governance framework. We continue to improve our corporate governance and aim to establish optimal systems.
The Company has made solid progress in reinforcing the management structure of the Group, adopting a Business Owner system in fiscal 2016 and a Group Chief Officer (CxO) system in fiscal 2017. With its eye on the next stage, in June 2019 Sompo Holdings changed from a Company with an Audit & Supervisory Board structure to a Company with Committees structure, enabling it to more swiftly and proactively make decisions pertaining to business execution and realize the vision of the Group.

Corporate Governance Reforms to Date

Composition of the Board of Directors

Sompo Holdings swiftly makes decisions and actively implements them toward realizing the Group’s vision, taking advantage of diverse personnel located around the world to move forward with changes to its business portfolio and reforms to its corporate culture.

Ratio of Outside Directors

As of July 2020, the number of outside directors was increased by one from the previous year, for a total of nine out of 12 directors (75%).
Note: The number and ratio of outside directors has increased from six out of 12 directors since the Company was established (April 2010).

Ratio of Female Directors

As of July 2020, the number of female directors was three out of 12 directors (25%).
Note: There were zero female directors when the Company was established, representing an increase in the number and ratio since then.

Ratio of Non-Japanese Directors

As of July 2020, the number of non-Japanese directors was one out of 12 directors (8%).
Note: There was one non-Japanese director when the Company was established, for no change in the number or ratio since then.

Highlights of Corporate Governance Structure

Group CEO and other abbreviated titles represent the following positions.
Group CEO: Group Chief Executive Officer / Group COO: Group Chief Operating Officer / Group CFO: Group Chief Financial Officer / Group CSO: Group Chief Strategy Officer /
Group CDO: Group Chief Digital Officer / Group CRO: Group Chief Risk Officer / Group CIO: Group Chief Information Officer / Group CHRO: Group Chief Human Resource Officer /
Group CBO: Group Chief Brand Officer

Company with Committees Structure	Sompo Holdings transitioned to a Company with Committees Structure in June 2019. Separating management supervision from business execution allows the Company to reinforce the supervisory function of the Board of Directors and delegate significant authority to executive divisions for swifter business execution. The Company also established three legally mandated committees: the Nomination Committee, the Audit Committee, and the Compensation Committee. Such measures have formed a governance structure that achieves greater transparency and fairness.
Executive Compensation Structure Designed to Increase Corporate Value and Align Interests with Shareholders	The Company regards its executive compensation structure as an important aspect of corporate governance. Based on the Basic Policies on Executive Compensation, the executive compensation structure was designed from an objective perspective by the Compensation Committee, which is headed by an outside director. The Company’s Policies on Decisions Pertaining to Executive Compensation describe the Basic Policies on Executive Compensation, the composition of compensation and how it is determined for each position, and the details of each type of compensation.
Global ExCo and MAC	Global ExCo, an advisory body to the Group CEO, discusses subjects that have a significant impact on management, such as Group-wide management strategies and business operation policies based on highlevel insight and wide-ranging views from a global perspective. The decisions by the Global ExCo are promptly reflected in strategies at the individual business level and then translated into specific business decisions andactions to speed up the entire process. Important matters related to operational management are discussed in detail by the MAC, an advisory body to the Group COO, and then implemented in operations. By utilizing the functions of these two deliberative bodies to their utmost, we will build a robust executive system that supports the growth of the entire Group.
Matrix-Style Management with Business Owner System and Group Chief Officer (CxO) System	Within the business execution framework, under the overall supervision of the Group CEO and Group COO, executives are delegated authority by the Board of Directors to make business decisions and execute business. The Business Owner system and the Group Chief Officer (CxO) system have been adopted to clarify authorities and responsibilities, and to facilitate dynamic and flexible decision-making and business execution.

Supervisory Framework

The Company elected to adopt a Company with Committees structure in June 2019 as part of efforts to strengthen corporate governance by separating management supervision from business execution, in order to reinforce the supervisory function of the Board of Directors and to accelerate business execution by delegating substantial authority to executive officers. The Company also established three committees: the Nomination Committee, the Audit Committee, and the Compensation Committee. This has put into place a governance system with improved transparency and fairness.

Board of Directors

The Board of Directors performs its duties as stipulated by law or the Articles of Incorporation, establishes important items for management defined in the Rules of Board of Directors, and serves a supervisory function overseeing the state of business execution. The chairman of the Board of Directors, who is appointed by the Board as stipulated in the Articles of Incorporation, also serves as a director and the Group CEO.
As of the conclusion of the 10th General Meeting of Shareholders, nine of the 12 directors are outside directors (a majority), consisting of 11 Japanese people and one non-Japanese person, of whom nine are men and three are women. The average length of service (including time served as an Audit & Supervisory Board member) is 4.3 years.

Nomination Committee

The Nomination Committee defines policy and standards for the appointment of directors and executive officers, determines the list of candidates, and is involved in the appointment of directors and executive officers at subsidiaries, depending on their business type and scale. In addition, the committee deliberates on the appointment and dismissal of the Group CEO based on a personal performance evaluation for the purpose of enhancing transparency and corporate governance.
The Nomination Committee consists of at least three directors, a majority of whom are from among the outside directors.
The chair of the Nomination Committee is chosen from among the outside directors on the committee. As of July 2020, the committee comprises five outside directors.

Compensation Committee

The Compensation Committee determines the evaluation, compensation scheme, and compensation amounts of directors and executive officers, and is involved in deciding the compensation scheme of directors and executive officers at subsidiaries, depending on their business type and scale.
In addition, the committee conducts a personal performance evaluation of the Group CEO to enhance transparency and objectivity in the compensation-deciding process, and to improve corporate governance.
The Compensation Committee consists of at least three directors, a majority of whom are from among the outside directors. The chair of the Compensation Committee is chosen from among the outside directors on the committee. As of July 2020, the committee comprises five outside directors.

Audit Committee

The Audit Committee audits—from a legal compliance and appropriateness perspective—the performance of duties by directors and executive officers, produces audit reports, and determines proposals regarding the appointment, dismissal, and non-reappointment of independent accounting auditors.
It also exercises right of consent to decisions on auditor compensation and the like, formulates audit standards, basic policies for audits, and auditing plans, and conducts organization-wide audits.
The Audit Committee consists of at least three members selected from among directors who do not have any executive roles, and the majority of members are outside directors.
In principle, the committee chair is an outside director, selected from among its members, and the committee has at least one full-time Audit Committee member and at least one Audit Committee member who has expert knowledge of finance and accounting. As of July 2020, there are five members on the committee, four of whom are outside directors.

Business Execution Framework

In this time of heightened volatility, uncertainty, complexity, and ambiguity (VUCA), a flexible and responsive management system is of utmost importance. To achieve such a management system, the Sompo Group has built a matrix-style management system comprising vertical and horizontal axes under the overall supervision of the Group CEO and Group COO. On the vertical axis, Business CEOs, who are heads of business segments, are delegated substantial authority to allow them to perform swift decisionmaking and business execution. On the horizontal axis, Group Chief Officers, who are the highest authority in their respective functional areas, oversee their area of responsibility on a Group-wide basis to ensure decision-making that is best for the Group and exercise functions laterally across the Group.

Business Owner System

Business CEOs are responsible for advancing plans for the entirety of their respective business segments while also helping build “A Theme Park for Security, Health & Wellbeing,” in order to contribute to the realization of the Group Management Philosophy and implement the Group’s management plans.
Accordingly, Business CEOs are endowed with significant authority, related to areas such as business strategy formulation, investment decision-making, and human resource assignment, as required, to accomplish those objectives.
Since the introduction of the Business Owner system in April 2016, Business CEOs have been leading their business segments in implementing dynamic growth strategies and in taking flexible and responsive action to address issues through swift decision-making and business execution.

Group CxO System

Under the Group CxO system, Group Chief Officers act as the highest authority for the Group in their respective functional areas. In this capacity, they exercise their functions in the Group’s best interests, acting laterally across the Group based on the Group’s strategies and on their roles and responsibilities.
The Group CxO system was introduced in April 2017 to serve as a framework designed to promote strong, missiondriven leadership. The roles and functions as well as the skills and experience required of each Group Chief Officer are defined in the Group’s function portfolio. The roles and functions of Group Chief Officers as well as the number of officers and the fields for which officer positions exist are not set but will rather be flexibly revised as the operating environment of the Group or the management issues it faces change.