Basic Policy

Based on our corporate philosophy of contributing to the development of society by providing trusted and high-quality marine transportation services, our Group strives for its sustainable growth and to improve corporate value over the medium to long term while responding to the expectations and earning the trust of shareholders, customers, and all other stakeholders. To this end, we developed corporate governance systems suited to the characteristics of our Group's operations.

These systems are continuously reviewed and improved, with a focus on enhancing the efficiency, soundness, and transparency of corporate management.

Corporate Governance System

The Board of Directors, having members who are highly knowledgeable about our Company's business and management, makes decisions on important operational execution as well as basic management policies. Further, the Company has established an Audit & Supervisory Board, or a board of auditors as defined in Japan's Companies Act.

From their independent standpoint, the Audit & Supervisory Board members are expected to exercise their authority to supervise directors and executive officers in the performance of their duties, particularly by attending Board of Directors' meetings. We believe that this system is effective for ensuring efficient and sound corporate management.

The members of the Audit & Supervisory Board, who have a wealth of related experience and advanced knowledge in their fields of expertise, carry out routine audits of the Company's financial status and monitor the activities of directors and executive officers to ensure that their duties are being effectively carried out, in cooperation with the Company's independent public accountant, the Internal Audit Office, and corporate auditors from the Group companies, as appropriate.

In addition, to increase the opportunities for the Board of Directors to make decisions from a broader perspective and to boost management supervision, the Board of Directors includes outside directors with a wealth of experience and broad knowledge of corporate management and other areas of expertise.

Our Company seeks to appropriately disclose information to increase the transparency of management and to help our stakeholders more accurately understand the Group's business conditions. In addition to compulsory disclosures, including legal and regulatory requirements relating to financial instruments exchange, we voluntarily offer financial and non-financial information to the best extent possible and in a timely and easy-to-understand way.

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Board of Directors

The Board of Directors, discusses and decides on basic policy and the most important matters connected with Group management. The Board of Directors decides matters guided by the law and the articles of incorporation and critical management issues defined in the discussion standards in our Regulations of Board of Directors. Furthermore, it is the body that supervises business operations. As a rule, the Board of Directors meets once per month.
The Board of Directors includes internal directors, including the chairperson, the president, and outside directors. Independent outside directors now account for one-third of the members.

Board of Executive Officers

In accordance with the basic policy decided on the Board of Directors, the Board of Executive Officers, as a rule, meets weekly to deliberate and decide on important matters related to business execution and management and to coordinate in advance the matters to be discussed by the Board of Directors. It includes executive officers selected by the Board of Directors, including the chairperson and the president /executive officer.

Audit & Supervisory Board

The Audit & Supervisory Board wields the authority required by law, organizes Audit & Supervisory Board meetings, defines auditing standards, and performs effective audits of the legality and the reasonableness of operations by directors, executive officers, and employees. Specifically, members attend meetings of the Board of Directors and the Board of Executive Officers, as well as important meetings and committee sessions of the ESG Committee, the Internal Control and Compliance Committee, the Safety and Environmental Committee, and the Budget Execution Committee. The Audit & Supervisory Board strives to identify management issues, to assess business conditions, to prevent violations of laws and the articles of incorporation, and performs accurate and effective audits.

ESG Committee

Our medium-term business plan, “FORWARD 2030” was formulated in 2020. In the plan, we set the goal of becoming a company that is both profitable and socially responsible by 2030. To achieve this goal, we see ESG initiatives as the foundation for supporting corporate sustainability.

The ESG Committee is a body under the Board of Directors tasked with discussing and deciding on issues related to the environment, society and governance that are crucial to the Company’s long-term growth in accordance with the Basic Sustainability Policy. The Committee meets on an annual basis.

The ESG Committee has executive officers comprised of a chairperson, which is a role served by our president, as well as committee members made up of our directors and managing executive officers, and the presidents of key Group companies, NS United Naiko Kaiun Kaisha, Ltd., and NS United Coastal Tanker Kaisha, Ltd. The ESG Committee deliberates and decides on ESG action policies, provides directions to the internal committees under its supervision (the Internal Control and Compliance Committee, the Safety and Environmental Committee, the Investor Relations Committee, the Disaster Prevention and Countermeasures Committee, and the DX Promotion Committee), and approves the editing of this report (NS UNITED REPORT).

The ESG Committee communicates between the Board of Directors and the committees and divisions that are under its supervision. It works toward resolving issues, notifying the Board of Directors of problems that arise at the worksites, and relaying the demands from the Board of Directors to the worksites.

Nomination and Compensation Advisory Committee

The Nomination and Compensation Advisory Committee was established as an advisory body serving the Board of Directors to improve neutrality, objectivity, and accountability of the functions of the Board of Directors when making decisions on nominations and compensation for the directors.

The committee comprises five directors, including the president, the majority of whom are independent outside directors, and it is chaired by an independent outside director. The Committee members are selected based on a resolution of the Board of Directors.

Skill Matrix

FY2022 Attendance of Board of Directors, Audit and Supervisory Board, Nomination and Compensation Advisory Committee etc. (As of June 2023)

• *1Attendance is not listed because he or she took office on June 28, 2023.
• *2Number of meetings of the Board of Directors and the Board of Corporate Auditors since June 28, 2022.

Results of Evaluating the Effectiveness of the Board of Directors

Every year since fiscal year 2015, we have been conducting a questionnaire administered to all directors and Audit & Supervisory Board members in order to evaluate the effectiveness of the Board of Directors. The results for this fiscal year were again shared with the Board of Directors.

The study found that the composition, roles, and operation of the Board of Directors were functioning appropriately, and the Board of Directors overall was effective, while also recognizing the achievements and issues as noted below. We will strive to further bolster the effectiveness of the Board of Directors by continually working on the issues that were identified.

Executive Compensation

Policy for Deciding Compensation

(a) Basic composition of compensation, etc.

Compensation for directors is designed to ensure　consistency with management strategies so that it　functions sufficiently as a sound incentive to enhance　corporate value. Specifically, the compensation consists　of fixed compensation, performance-based bonuses　(executive bonuses) reflecting business performances　for the fiscal year, and performance-based stock　purchase compensation that reflects medium- and longterm increases in corporate value. Performance-based　compensation, which consists of executive bonuses and　stock purchase compensation, is designed to account for　at most roughly one-third of total compensation.

(b) Fixed compensation

Fixed compensation Fixed compensation is paid in cash each month, with a standard amount established based on the director's position, taking into consideration the capabilities and responsibilities required of directors in the shipping industry.

(c) Performance-based executive bonuses

Performance-based executive bonuses Bonuses are linked to dividends per share for each term and are paid in cash as compensation linked to short-term performance. This is based on dividend policies and the assumption of paying a certain percentage or more special allowances (bonuses) to employees.

(d) Share purchase compensation

Share purchase compensation Share purchase compensation is paid as compensation linked to medium- and long-term performance. This compensation is linked to the degree of achievement of the medium-term business plan and the amount of increase in corporate value (stock value). It aligns directors' interests with the interests of shareholders. Directors provide amounts equivalent to the stock purchase compensation they receive to the directors' shareholding association, purchasing stocks through the association.

(e) Compensation for outside directors and Audit & Supervisory Board members

Compensation for outside directors and Audit & Supervisory Board members Outside directors and Audit & Supervisory Board members are only paid fixed compensation since they are responsible for performing audits and providing advice regarding the Company and the entire Group's management from a position independent of business operations. Outside director compensation is decided by resolution of the Board of Directors, and Audit & Supervisory Board member compensation is decided through deliberation by Audit & Supervisory Board members.

Procedures for Deciding Compensation

Compensation for directors is determined by the Board of Directors based on inquiries to and advice from the Nomination and Compensation Advisory Committee. The Nomination and Compensation Advisory Committee examines the appropriateness of calculated executive compensation, and reports its findings to the Board of Directors. At the same time, the Board of Directors determines the amount of compensation for each individual director based on the report of the Nomination and Compensation Advisory Committee by confirming that the method and content of the decision are consistent with the decision policy resolved by the Board of Directors.

The total amount of fixed compensation for Directors and Audit & Supervisory Board Members indicated above includes the amount paid to one Director and two Audit & Supervisory Board Members who retired on June 28, 2022 at the close of the 96th Ordinary General Shareholders' Meeting held the same day.
The amount does not include that related to one non-paid Director.