HOW WE DO IT Corporate Governance

Basic Policy Functions and Role of Corporate Governance System Constituents Number of Meetings / MEDIA DO Co., Ltd., recognizes the following as important MEDIA DO aims to develop a corporate culture in which all Name Overview Frequency in FY2019 management issues to be addressed as its management internal institutions, officers, and employees make fair and The Board of Directors is the Company’s highest management decision-making body. Based on the internal regulations for the Board of Directors, the Board of 1. Board of Directors makes decisions on important matters (management policies, business plans, acquisition and disposal of important assets, etc.) and supervises the 17 times a year grows increasingly more global: The expedition and stream- accurate decisions. Improving management transparency, Directors status of operational execution. Regular meetings of the Board of Directors are held once a month, in principle, and special meetings are convened as necessary. lining of management decisions to facilitate the further meanwhile, will require prompt and proactive disclosure 2. Representative As the chief executive and the head of management, the representative director directs discussions at Board of Directors meetings and oversees all aspects — broadening of its business and the improvement of corporate of information. Systems for information disclosure are Director of operational execution at the Company. Audit & Supervisory Board members attend meetings of the Board of Directors to maintain an understanding of conditions within the Company and perform value and the improvement of management health and therefore being enhanced toward this end. audits of operations along with accounting audits by interviewing directors and review of relevant documents. Standing Audit & Supervisory Board members 3. Audit & Supervisory also attend important meetings other than those of the Board of Directors to provide for sufficient oversight of the status of operational execution by directors. transparency through enhanced corporate governance. Going forward, the Company will continue to 17 times a year Board The Audit & Supervisory Board meets once a month. At meetings, the three Audit & Supervisory Board members establish audit plans and review the status Entrenching corporate ethics and awareness of these prin- enhance its organization in the pursuit of more effective of audit implementation and audit results and perform other tasks to ensure effective and efficient audits. Moreover, information is shared between Audit & Supervisory Board members, the Internal Audit Office, and the accounting audit to ensure efficient and synergetic audits. ciples throughout the Company will be imperative to improv- corporate governance. The Executive Committee meets once a week, in principle, primarily to discuss matters pertaining to business operation and to facilitate efficient operational 4. Executive execution through the examination and decision of matters pertaining to regulations for divisions of authority and basic operational execution items related to Once a week Committee ing the health of management. By fostering such awareness, management that are not decided by the Board of Directors. The Internal Audit Office is an organization under the direct jurisdiction of the representative director, president and CEO that performs internal audits in 5. Internal Audit accordance with the plans approved by the representative director, president and CEO. In this manner, the office audits the Company’s business activities while — Office supervising the actions of directors and employees from the perspective of legal compliance. Corporate Governance System The Risk Management Committee is chaired by the director in charge of the General Affairs Department and comprised of representatives from business 6. Risk Management divisions and other relevant divisions. Meetings of the Risk Management Committee are convened as necessary, with meetings being held on a quarterly basis, Three times a year At the Company, the Board of Directors has the highest This composition makes it possible for outside Audit & Committee in principle. At these meetings, committee members identify the risks that may impact the Company, examine possible countermeasures, and discuss related authority for management decision-making while the Audit & Supervisory Board members to audit the operational execu- matters. Information on decisions by the committee is communicated throughout the Company. Supervisory Board carries out the management oversight tion of directors with operational execution functions (execu- function. In addition, the Company’s Executive Committee is tive directors) from the perspectives of legal compliance and Policies for Appointment of Directors and Audit & Supervisory Board Members a committee of similar standing to the Board of Directors, appropriateness. Similarly, outside directors are able to The articles of incorporation of MEDIA DO stipulate that the Audit & Supervisory Board members are expected to meet with the former associated with the operational execution exert influence on executive directors through the supervi- Board of Directors is to be comprised of eight or fewer direc- the requirements for these positions described in the functions of directors and executive officers and the latter sion of their exercise of voting rights at meetings of the Board tors and that the Audit & Supervisory Board is to consist of Companies Act of Japan as well as the conditions for desig- involved in management decision-making and operation of Directors and the appropriateness of these decisions. With four or fewer Audit & Supervisory Board members. The nation as independent directors and independent auditors oversight functions. This division of functions contributes to all officers performing their functions in this manner, the Company’s basic policy is to select individuals to fill positions stipulated by the Tokyo Stock Exchange. Moreover, outside increased efficiency in operational execution. All outside Company is working to improve management health and as directors and Audit & Supervisory Board members that director and outside Audit & Supervisory Board members Audit & Supervisory Board members have been designated transparency so that it can enhance corporate value through are appropriate for the positions with consideration paid to candidates must be judged to effectively present no risk of as independent auditors as stipulated by the Tokyo Stock the exercise of its corporate philosophy while paying due the balance of insight, experience, and skills pertaining to conflicts of interest with general shareholders. Going for- Exchange, while the two outside directors are designated as consideration to the interests of general shareholders. the Company’s businesses. Director candidates are selected ward, the Company will continue to adhere to this policy independent directors. through comprehensive evaluation of their experience, while examining potential policies and procedures for secur- insight, specialized expertise, and other attributes based on ing a more diverse staff of directors and Audit & Supervisory MEDIA DO’s corporate philosophy and business strategies. Board members in terms of gender, nationality, and Corporate Governance System (As of May 28, 2020) Candidates for positions as outside directors and outside other characteristics.

General Meeting of Shareholders

Appoint / Dismiss Appoint / Dismiss Appoint / Dismiss Attendance at Board of Director Reason for Appointment Directors Meetings Yasushi Fujita As the founder of the Company, Yasushi Fujita is well versed in all of its business and has a wealth of experience and exceptional insight as a manager. He was 17/17 Coordinate President and CEO appointed to his current position so that his wealth of experience and exceptional insight can be utilized in the management of the Company. 1. Board of Directors Audit 3. Audit & Supervisory Board Shin Niina is knowledgeable in the publishing industry and in the eBook industry and has been involved in a wide range of business within these industries and 6 directors 1 standing Audit & Accounting auditor Shin Niina Director, Vice also possesses a wealth of experience and exceptional insight as a manager. He was appointed to his current position so that his wealth of experience and 17/17 (of whom 2 are outside directors) Supervisory Board member Report President, and COO exceptional insight can be utilized in the management of the Company. 2 outside Audit & Since joining the Company, Yoshiyuki Suzuki has been involved in a wide range of administrative divisions, including those pertaining to administrative Supervisory Board members Yoshiyuki Suzuki management, accounting, and human resources and general affairs. He therefore possesses plentiful experience and exceptional insight into finance, Appoint / 17/17 Report Director accounting, human resource strategy, and other administrative matters. He was appointed to the position of director so that his wealth of experience and Dismiss / Audit exceptional insight can be utilized in the management of the Company. Atsushi Mizoguchi has a breadth of experience in digital distribution, digital libraries, new business development, and other businesses that are central Atsushi Mizoguchi Appointed to current Report to the Company as well as deep insight into mobile communications and IT. He was appointed to the position of director so that his wealth of experience and Report Director position in May 2020 2. Representative director Coordinate Audit exceptional insight can be utilized in the management of the Company. Keiichi Enoki Keiichi Enoki has extensive knowledge and experience in the fields of communications and digital content as well as extensive experience and in-depth knowledge Direct 17/17 Outside Director* as a corporate manager. He was appointed to the position of director so that his wealth of experience and insight can be utilized in the management of the Company. Coordinate Report / Approve Ken Takayama is deeply acquainted with the corporate finance and financial fields and has extensive experience and broad knowledge pertaining to all aspects of Examine corporate management of global Internet businesses. He has been judged to be capable of providing appropriate advice on the general management of the Company Ken Takayama by calling on this experience and insight as well as the familiarity with the Company’s business operations gained through his experience as an outside Audit & 13/13 Outside Director* Supervisory Board member of the Company. He is also expected to exercise the influence of his position as an outside director, which is based on the supervision of Manage / Consult 6. Risk Management Committee 4. Executive Committee Operate the execution of voting rights and the suitability of such decisions, on executive directors and thereby serve to strengthen the corporate governance of the Company. 4 internal directors 5. Internal Audit Office Legal counsel He was appointed to the position of director so that he can fulfill such a role. 1 standing Audit & Supervisory Board member Advise Audit & Supervisory Attendance at Board of Attendance at Audit & Reason for Appointment Board Member Directors Meetings Supervisory Board Meetings Report / Corporate Planning Audit / Direct Audit Propose Office Kazuyoshi Ohwada Kazuyoshi Ohwada has experience in the human resource, general affairs, and finance and accounting divisions of the Standing Audit & Company and possesses the insight necessary for facilitating the healthy and appropriate operation of the Company. 17/17 17/17 Supervisory Board He was appointed to the position of Audit & Supervisory Board member because it was judged that he is capable of Member effectively fulfilling this role. Oversee / Report Manage Audit Toshiaki Morifuji Toshiaki Morifuji is qualified as a certified public accountant and therefore has considerable insight pertaining to Outside Audit & finance and accounting. He was appointed to the position of outside Audit & Supervisory Board member out of 17/17 17/17 Supervisory Board consideration for this insight. Group subsidiaries Member*

Tsuyoshi Shiina Tsuyoshi Shiina is qualified as a lawyer and a tax accountant and therefore has considerable insight pertaining to Outside Audit & corporate legal affairs, finance, and accounting. He was appointed to the position of outside Audit & Supervisory 17/17 17/17 Supervisory Board Board member out of consideration for this insight. Member*

* Notification has been submitted designating the individuals in question as independent directors or auditors as stipulated by the Tokyo Stock Exchange.

46 MEDIA DO Report 2020 47 HOW WE DO IT

Corporate Governance

Compensation of Directors and Audit & Supervisory Board Members Messages from the Outside Directors At the 12th Annual General Meeting of Shareholders held on performance, and other factors pertaining to the director by May 25, 2011, the upper limit for annual compensation of the representative director, president and CEO based on Quantitatively and Qualitatively Monitoring the directors was set at ¥170 million. In addition, the limit for authority delegated by the Board of Directors. Executive Branch to Enhance Corporate Governance restricted stock compensation was set at ¥50 million to be Compensation of Audit & Supervisory Board members, I became an outside director of the MEDIA DO three years ago. Keiichi Enoki issued as an amount separate from standard compensation meanwhile, is determined through discussion among audi- This was the same year that MEDIA DO converted industry Outside Director at the 19th Annual General Meeting of Shareholders held on tors. The amounts of compensation paid in the fiscal year giant Digital Publishing Initiatives Japan Co., Ltd., into a sub- May 30, 2018. The compensation to be paid to individual ended February 29, 2020 were decided through this process. sidiary. At this time, when the Company was transforming directors in a given fiscal year is decided based on compre- and approaching a turning point through the incorporation hensive consideration of the role, degree of contribution, of different cultures and systems, MEDIA DO undertook ambi- tious corporate governance reforms through the reflection of Compensation by Type (Millions of yen) Total Compensation Number of outside perspectives, insight, and expertise in the Board of Restricted Stock Recipients (Millions of yen) Basic Compensation Bonuses Retirement Benefits Directors. I feel that a major factor supporting this ambition Compensation is the strong leadership of President Yasushi Fujita, founder Directors (excluding outside directors) ¥77 ¥64 ¥13 ¥– ¥– ¥4 of the Company. Audit & Supervisory Board members 6 6 – – – 1 (excluding outside Audit & Supervisory Board members) Such strong leadership and swift decisive decisions are Outside directors and auditors 15 15 – – – 6 major characteristics and strengths of corporate governance at MEDIA DO. However, there is still a clear need to install internal controls and reinforce Group governance from the Evaluation of Effectiveness of the Board of Directors perspective of management’s supervision of the executive Self-evaluations and analyses of the effectiveness of the management, majority shareholders, and other parties branch. Such efforts should be integrated into the process of Board of Directors are performed for the purpose of improv- related to the Company. In addition, it was determined that growing the Company’s business while reforming business ing the functionality of the Board of Directors and subse- open, frank, and constructive discussions were being held at portfolios and engaging in new businesses. I therefore hope to quently the corporate value of the Company. Advice from meetings of the Board of Directors and that outside directors contribute to rapid growth for MEDIA DO through quantitative third-party institutions has been received in performing the were fulfilling their oversight function. Based on this general evaluations of investment benefits and thorough qualitative self-evaluations and analyses, which were performed positive evaluation, it has been determined that the Board of monitoring of processes. through the following procedures. Directors is effective overall. In March 2020, questionnaires were issued to all direc- Conversely, issues were identified including the need for tors and Audit & Supervisory Board members on the Board documents to be provided at timings that allow for review of Directors. Responses were submitted directly to the con- prior to Board of Directors meetings and for more sufficient tracted third-party institution to maintain anonymity, and the time to be secured at meetings for discussing matters such Support for Ongoing Value Creation Based institution submitted a report aggregating these responses. as the formulation of Groupwide corporate philosophies. on Awareness of Business Potential and Risks This report was analyzed, discussed, and evaluated at the Information on such issues was shared to facilitate the I have been involved in the management of MEDIA DO for two regular meeting of the Board of Directors held in May 2020. improvement of the functionality of the Board of Directors years as an Audit & Supervisory Board member and one year as The findings of this review process were as follows. and to enhance discussions at meetings. a director. In each year of my involvement in management, the The responses to the questionnaires indicated that Based on this evaluation of the effectiveness of the Board foundations for incorporating outside perspectives and input the membership of the Board of Directors, including the of Directors, swift action will be taken after sufficient discus- into management have become increasingly solid. When the portion of outside directors, was appropriate and that the sion of the identified issues to continuously heighten the Japanese government announced a state of emergency in Ken Takayama Company is effectively managing conflicts of interest with functionality of the Board of Directors. response to the global COVID-19 pandemic, I saw the Company Outside Director take a flexible approach toward business operations through measures such as shifting to remote work environments for Risk Management various processes. MEDIA DO has established risk management regulations to may impact the Company, examine possible countermea- MEDIA DO needs to evolve in a variety of other ways, for mitigate risks and minimize the potential losses by the sures, and discuss related matters. Information on decisions example, by expanding operations and shaping risk manage- Company, and its risk management system is being strength- by the committee is communicated throughout the Company. ment from the perspective of the ongoing improvement in ened accordingly. In addition, the Risk Management In the event of a crisis, the Company will act in accordance corporate value. The Company is currently performing well. Committee has been established. This commitment is with the Management Crisis Response Manual by assembling This is therefore an ideal time for exhaustive discussion and chaired by the director in charge of the General Affairs a response headquarters and communicating the necessary action to accomplish tasks such as breaking away from earn- Department and comprised of representatives from busi- information inside and outside the Company to furnish swift ings structures that are overly dependent on specific busi- ness divisions and other relevant divisions. Meetings of the and accurate responses to a crisis. In addition, consultant nesses. The recognition of this fact is shared among the Risk Management Committee are convened as necessary, contracts have been formed with law firms, enabling the members of the Board of Directors. New ventures necessar- with meetings held on a quarterly basis, in principle. At Company to receive accurate advice and suggestions through ily entail new risks. However, there is also a risk to inaction. these meetings, committee members identify the risks that consultations pertaining to legal issues. Mindful of the Company’s medium- to long-term vision for MEDIA DO, I hope to contribute to ongoing improvements in corporate value based on an awareness of business potential and risks.

48 MEDIA DO Report 2020 49 HOW WE DO IT

Corporate Governance

A. Yasushi Fujita B. Shin Niina C. Yoshiyuki Suzuki Management Team (As of May 28, 2020) Representative Director, President and CEO Director, Vice President, and COO Director

Apr. 1996 Es tablished Fuji Techno Limited Company (merged Apr. 2003 Gener al Manager of Books Business Department of Dec. 1986 Joined Takahashi Accounting Office into the Company in November 2001), Representative Kadokawa Shoten Co., Ltd. Mar. 1997 Joined Red Hot Company Co., Ltd. Director of the Company Jan. 2007 Managing Director of Kadokawa Shoten Co., Ltd. Oct. 1997 Joined ASAHI INTECC CO., LTD. Apr. 1999 Es tablished the Company, Representative Director (currently KADOKAWA CORPORATION) Jan. 2001 Joined World Bridal Co., Ltd. and President of the Company Jan. 2008 R epresentative Director of Kadokawa Editorial Nov. 2007 Joined the Company Mar. 2017 R epresentative Director and Chairman of Digital Co., Ltd. Mar. 2008 Gener al Manager of the Accounting and Finance Publishing Initiatives Japan Co., Ltd. (changed its Apr. 2013 As sistant Secretary General of Kadokawa Culture Department of the Company company name to MEDIA DO Co., Ltd., in March 2019) Promotion Foundation July 2008 Ex ecutive Officer and General Manager of the (current position) Oct. 2013 Secr etary General of Kadokawa Culture Promotion Accounting and Finance Department of the Company Sep. 2017 R epresentative Director and Group CEO of the Foundation Mar. 2014 Ex ecutive Officer and General Manager of the Company June 2014 R epresentative Director and President of Digital Business Administration Department of the Company Mar. 2018 R epresentative Director and Chairman of MEDIA DO Publishing Initiatives Japan Co., Ltd. (changed its May 2015 Resigned from the Company Co., Ltd. (ceased to exist in March 2019 due to the company name to MEDIA DO Co., Ltd., in March 2019) Nov. 2015 Joined the Company, Executive Officer and General merger with Digital Publishing Initiatives Japan (current position) Manager of the Administration Division Co., Ltd.) Mar. 2018 R epresentative Director and President of MEDIA DO May 2016 Dir ector and General Manager of the Administration Representative Director, President, Executive Officer, Co., Ltd. (ceased to exist in March 2019 due to the Division of the Company and CEO of the Company merger with Digital Publishing Initiatives Japan Mar. 2017 Audit & Supervisory Board Member of Digital Mar. 2019 R epresentative Director and Chairman of Digital Co., Ltd.) Publishing Initiatives Japan Co., Ltd. (changed its Publishing Initiatives Japan Co., Ltd. (current position) Vice President, Executive Officer, and COO of the company name to MEDIA DO Co., Ltd. in March 2019) I H D May 2019 R epresentative Director, President and CEO Company Sep. 2017 Audit & Supervisory Board Member of MEDIA DO Co., E (current position) May 2018 Dir ector, Vice President, Executive Officer, and COO of Ltd. (ceased to exist in March 2019 due to the merger the Company with Digital Publishing Initiatives Japan Co., Ltd.) Mar. 2019 R epresentative Director and President of Digital Mar. 2018 Director, Executive Officer, and CAO of the Company Publishing Initiatives Japan Co., Ltd. (current position) May 2019 Dir ector of the Company (in charge of the Finance and May 2019 Dir ector, Vice President, and COO of the Company Accounting Department) (current position) (current position)

D. Atsushi Mizoguchi E. Keiichi Enoki F. Ken Takayama Director Outside Director Outside Director

Apr. 2000 Joined NTT DoCoMo, Inc. (currently NTT DOCOMO, Apr. 1974 Joined Nippon Telegraph and Telephone Public Apr. 1988 Joined The Industrial Bank of Japan, Limited INC.) Corporation (currently Mizuho Bank, Ltd.) July 2008 Joined the Company, Executive Officer and General July 1992 Joined NTT Mobile Communications Network, Inc. Nov. 1999 Managing Director of Rakuten, Inc. Manager of the Content & Media Business Division of (currently NTT DOCOMO, INC.) June 2001 Out side Auditor of TECHMATRIX CORPORATION the Company Mar. 1995 Gener al Manager of the Tochigi Branch of Feb. 2010 Chief Financial Officer of Rakuten, Inc. Sep. 2009 Ex ecutive Officer and General Manager of the Sales NTT Mobile Communications Network, Inc. Mar. 2013 Advisor of Rakuten, Inc. Division of the Company Jan. 1997 General Manager of the Corporate Sales and July 2014 Out side Director of STAR FESTIVAL INC. May 2010 Dir ector and General Manager of the Sales Division of Marketing Department of NTT Mobile Communications June 2015 Out side Director (Audit and Supervisory Committee the Company Network, Inc. Member) of TECHMATRIX CORPORATION (current Mar. 2013 Dir ector and General Manager of the Business Aug. 1997 Gener al Manager of the Gateway Business position) Headquarters of the Company Department of NTT Mobile Communications Network, Nov. 2016 Out side Director (Audit and Supervisory Committee Sep. 2016 Dir ector and General Manager of the Business Inc. Member from November 2018) of Metaps Inc. Development Division of the Company June 2000 Dir ector and General Manager of the Gateway (current position) Mar. 2017 Dir ector of Digital Publishing Initiatives Japan Co., Business Department of NTT DOCOMO, INC. May 2017 Out side Audit & Supervisory Board Member of the Ltd. (changed its company name to MEDIA DO Co., July 2001 Dir ector and General Manager of the i-mode Business Company Ltd. in March 2019) Division of NTT DOCOMO, INC. May 2018 Out side Director of Linkers Corporation Sep. 2017 Dir ector and Group COO of the Company June 2003 Managing Director and General Manager of the Sep. 2018 Out side Director of Mercari, Inc. (current position) Director of MEDIA DO Co., Ltd. (ceased to exist in i-mode Business Division of NTT DOCOMO, INC. May 2019 Out side Director of the Company (current position) March 2019 due to the merger with Digital Publishing June 2004 Managing Director and General Manager of the Initiatives Japan Co., Ltd.) Products & Services Division of NTT DOCOMO, INC. Major Concurrent Positions Mar. 2018 Dir ector, Executive Officer and CBO of the Company June 2005 R epresentative Director and President of NTT Outside Director (Audit and Supervisory Committee Member) of May 2018 Ex ecutive Officer and CBO of the Company DoCoMo Tokai, Inc. (currently the Tokai Regional TECHMATRIX CORPORATION June 2019 Ex ecutive Officer and General Manager of the New Office of NTT DOCOMO, INC.) Outside Director (Audit and Supervisory Committee Member) of Service Promotion Office of the Company June 2008 R epresentative Director and President of DOCOMO Metaps Inc. (current position) Engineering Inc. Outside Director of Mercari, Inc. F June 2012 Advisor of DOCOMO Engineering Inc. June 2013 Out side Auditor of NDS Co., Ltd. Nov. 2016 Out side Director of UNIMEDIA INC. (current position) May 2017 Out side Director of the Company (current position) G Major Concurrent Position Outside Director of UNIMEDIA INC. C

G. Kazuyoshi Ohwada H. Toshiaki Morifuji I. Tsuyoshi Shiina B Standing Audit & Supervisory Board Member Outside Audit & Supervisory Board Member Outside Audit & Supervisory Board Member A June 1969 Joined Sony Audio Corporation (currently Sony Global Oct. 2003 Joined ChuoAoyama Audit Corporation Oct. 2002 Registered as a lawyer Manufacturing & Operations Corporation) June 2007 Registered as a certified public accountant Joined Kimura Law Office Mar. 2002 Joined the Company, General Manager of the July 2007 Joined KPMG AZSA & Co. (currently KPMG AZSA LLC) Mar. 2003 Joined Kandabashi Law Office Administration Department of the Company July 2009 Es tablished MORIFUJI Certified Public Account Office, (currently White & Case LLP) July 2003 Dir ector and General Manager of the Administration Director of MORIFUJI Certified Public Account Office July 2005 Joined Nagashima Ohno & Tsunematsu Department of the Company (current position) Oct. 2011 Joined Industrial Growth Platform, Inc. Mar. 2008 Dir ector and General Manager of the Administration May 2010 Out side Audit & Supervisory Board Member of the Jan. 2012 Advisor to the House of Representatives (transferred Division of the Company Company (current position) from Industrial Growth Platform, Inc., appointed to May 2012 Senior Managing Director and General Manager of the Mar. 2013 Es tablished Nagoya Tax Corporation, Representative the National Diet of Japan Fukushima Nuclear Administration Division of the Company of Nagoya Tax Corporation (current position) Accident Independent Investigation Commission) Sep. 2013 Dir ector and General Manager of the Administration Dec. 2012 Member of the Lower House of Representatives Division of the Company Major Concurrent Positions Nov. 2014 Registered as a tax accountant May 2014 Audit & Supervisory Board Member of the Company Director of MORIFUJI Certified Public Account Office Dec. 2014 R epresentative of Tsuyoshi Shiina Legal and Tax (current position) Representative of Nagoya Tax Corporation Accountant Office (current position) Jan. 2017 Outside Director of Phone Appli Inc. May 2017 Out side Audit & Supervisory Board Member of the Company (current position)

Major Concurrent Position Representative of Tsuyoshi Shiina Legal and Tax Accountant Office

50 MEDIA DO Report 2020 51