Roundtable with outside directors and institutional investors

I acknowledge the severity of this issue and am treating it with utmost seriousness. I have been informed on a timely basis about the developments of the case and ensured that all communications with external parties are transparent. We have already fully reimbursed the subcontractors for the excessive charges. The Audit Committee pursued responsibility of related management for these illegal activities and consulted with the board of directors to determine the appropriate disciplinary actions. Following the Japan Fair Trade Commission's recommendation and reports of continued overbilling, we engaged external legal counsel to investigate and they found no further illegal activities. To enhance our relationship with suppliers moving forward, we established a dedicated channel for suppliers to speak up concerns. Maintaining robust supplier relationships is crucial. We will continue to prioritize monitoring compliance with the Subcontract Law through the Audit Committee's audits, including preventive measures. Furthermore, fostering an ethical culture is essential, and I will review our compliance training for employees.

The automotive industry is at a major turning point, and in determining its adaptability to external changes, the outside independent directors participated in several discussion rounds with the executive team before the announcement of "The Arc". I emphasized the importance of the plan being actionable and aligning with Nissan’s long-term vision, "Nissan Ambition 2030". My focus was to ensure that Nissan leverages its strengths and weaknesses effectively, selects and concentrates on key business areas, and utilizes alliances strategically. At the board of directors, we consistently engage in open and detailed discussions and will continue to oversee the implementation of "The Arc".

Enhancing corporate value is critical, as you mentioned. In upcoming board meetings, we plan to engage in detailed discussions with the executive team about the progress of the new business plan, stock price trends, financial soundness, and considerations for repurchasing Nissan shares held by Renault, which are all aimed at enhancing corporate value. Reflecting on the past five years, enhancing financial structure and sales quality were essential for our sustainable growth. Despite challenges such as the COVID-19 pandemic and semiconductor shortages, we made steady progress. The automotive industry is undergoing a significant transformation, and we must continue to enhance our brand and corporate value by delivering good products and effectively marketing them to our customers.

In the dynamic automotive industry, it is crucial to focus on the long-term sustainability of business operations, stock price, and enhancement of corporate value. We have incorporated long-term evaluation metrics such as sales quality improvement, carbon neutrality efforts, and initiatives on human rights. Aligning with shareholders to enhance stock price and corporate value, and foster commitment to medium and long-term business growth, we introduced Restricted Stock Units (RSUs) to provide long-term incentives beyond mere monetary compensation in order to motivate the executive team.

Coexistence and mutual prosperity with suppliers are of the highest priority to Nissan. Going forward, it is also important to comprehensively and carefully review how Nissan interacts with all suppliers, and promptly detect and manage any issues, which I intend to closely monitor.

Following the recent vehicle certification fraud issue, we conducted a thorough investigation of approximately 27,000 inspection items across all 358 events, including model changes and minor modifications, and found no fraudulent activities within our organization. Since the vehicle inspection issue in fiscal year 2018, there has been an increased awareness of compliance in our production and development departments, which contributed to the positive outcome of this investigation. We will continue to work closely with the executive team to maintain vigilance and prevent weathering.

In FY2019, the company transitioned to a three statutory committee structure and the committees established respective policies and principles. In FY2020, each committee is functioning more strategically.
Active discussions are taking place at the BOD and committees with the involvement of diverse members and close communication with executives. The effectiveness of the BOD is ensured.
Currently, the biggest challenge is to deliver the results of Nissan NEXT. The BOD is holding in-depth discussions regarding the performance recovery as well as the mid to long-term strategies.

One of the three key challenges for the nomination committee is to develop a succession plan for the future CEO. About a year ago, we began identifying requirements for the future CEO. We are entering the final stages of developing the program and expediting the process to execute the program.
Nissan has next generation leaders with great potential.

Climate change will become one of the top priorities going forward. Nissan announced to be carbon neutral by 2050 and there are many items to be completed by the 2030s, including electrification and innovation of production technology. Nissan will decide on a strategy to address climate change, while utilizing its strengths in electrification and core competencies.

The performance recovery is on track, but it is still insufficient for the long-term sustainability of the company. It is important to increase unit sales to achieve profitable growth. Therefore, it is necessary to consider the value proposition of the company, which needs to be encompassed in the business plan.

As an outside director, we represent minority shareholders and protect their interests. Nissan has a policy to eliminate conflicts of interest; the company established a conflicts of interest elimination team to enforce this policy, which is headed by the chair of the audit committee. The Alliance is an important asset, and it is important that the company fully utilize the assets of the Alliance to enhance its corporate value. We will manage from a neutral standpoint by checking for conflicts of interest and monitoring benefits to Nissan’s minority shareholders.

The CEO/COO are actively involved in diversity and inclusion efforts, but the number of female workers are still small at gemba. Nissan is a leader in diversity and inclusion among Japanese companies. However, we need to discuss this at the BOD level and on the business execution side, including HR, in order to further enhance diversity in Japan.

BOD meetings used to be around 30 minutes but now last approximately 3 to 4 hours and 7 to 8 hours if pre-BOD meetings are included. Discussions have become more active due to the diversity of the board members.

We will work toward enhancing sustainable profitability through the transition from quantity to quality, selection and concentration and maximizing the Alliance.

We discussed the plan not only at the monthly BOD meetings but also at the Independent Directors Committee and extraordinary BOD meetings. We provided our feedback on the plan, which was prepared by the management team, and checked for possible areas of conflicts of interest.

We would like to proceed with the development and implementation of a long-term-vision for the next MTP as soon as possible. However, the content is most important. Technology is the key factor for the future corporate value of an automobile company and Nissan has a considerable amount of potential.

There is no specific ESG-related KPI but implementation of the Nissan Way is one of the factors in determining compensation. We designed the scheme to incorporate many factors including performance and the Nissan Way in a balanced manner.