CORPORATE
GOVERNANCE

CORPORATE

GOVERNANCE

Overview of Corporate Governance

Basic Policy on Corporate Governance
Having adopted "Empower Data, Innovate the Business, Shape the Future" as its business vision, WingArc1st aims to realize a better society by adding value to data and bringing about innovation. On the basis of our "Build the Trust" concept, we have positioned "producing results that exceed the expectations of other parties" and "being trusted" as core values of the Group while working to achieve sustainable business development and improvements in corporate value. Essential to that goal is prompt decision making in response to changes in the business environment, ensuring management soundness, efficiency, and thorough legal compliance. We are therefore striving to establish an appropriate corporate governance system.

Organization Chart

The company has adopted its current corporate governance system (Organizational structure: Company with Audit & Supervisory Board) to ensure the transparency and soundness of its management and to accelerate decision-making. We have established an executive officer system to divide business execution functions and decision-making/supervision functions, as well as a Nomination and Compensation Committee composed mainly of independent outside directors to strengthen the supervisory functions over management.

Organization Chart

Composition of the Board of Directors

Main Committee Responsibilities

Inside Director

Chairman (of the Board of Directors)
Hiroyuki Uchino

Mar. 2004	President of the Company
May 2018	Chairman of the Company

President
Executive Officer and CEO
Jun Tanaka

Sep. 2004	Joined the Company
May 2012	Director of the Company
May 2018	President, Executive Officer
May 2021	President, Executive Officer and CEO

Director,
Executive Officer, Division Head and CTO
Ko Shimazawa

Jul. 2009	Joined Four-Clue Inc. (now WingArc1st Inc.)
Apr. 2016	Executive Officer, CTO and General Manager of the Technical Headquarters of the Company
Mar. 2021	Executive Officer, in charge of Business Supervision and CTO of the Company
May 2021	Director, Executive Officer, in charge of Business Supervision and CTO

Director,Executive Officer, CFO and General Manager of Administrative Headquarters Taisuke Fujimoto

Director,
Executive Officer and CFO
Taisuke Fujimoto

Aug. 2007	Joined WingArc1st Inc.
Mar. 2010	General Manager of the Finance and Accounting Department of the Company
Apr. 2016	Executive Officer, CFO and General Manager of Administrative Headquarters of the Company
May 2021	Director, Executive Officer, CFO and General Manager of Administrative Headquarters

Outside Director

Outside Director
Kotaro Yamazawa

Reasons for appointment and other details

Outside Director
Takao Yajima

Reasons for appointment and other details

Outside Director
Shunsuke Okada

Reasons for appointment and other details

Outside Director
Kaori Iizumi

Reasons for appointment and other details

Outside Auditor

Outside Auditor
Nagako Oe

Reasons for appointment and other details

Outside Auditor
Yoshitaka Asaeda

Reasons for appointment and other details

Outside Auditor
(Full-time)
Shigeki Iwashita

Reasons for appointment and other details

Skills Matrix

Evaluation of the Effectiveness of the Board of Directors

WingArc conducted an evaluation of the effectiveness of the Board of Directors through a third-party organization in January 2023. We have outlined the objectives, methodology, and results of this evaluation below.

Objectives of the evaluation
To achieve the Company's vision, it is essential to make decisions quickly in response to changes in the business environment, ensure sound and efficient management, and comply thoroughly with laws and regulations. Founded on our commitment to creating an appropriate corporate governance system, we conduct an analysis and evaluation of the effectiveness of the Board of Directors every year to ensure that it can effectively fulfill its intended role.

Evaluation methodology
The evaluation of the Board of Directors for FY2023 was conducted through a survey of all directors. We confirmed the particulars considered important for the Board of Directors to effectively fulfill its role, such as the composition and management of the Board of Directors and deliberations regarding strategy. In addition, we also confirmed the Board's involvement in issues related to sustainability and other related areas. To ensure objectivity in the evaluation process, we utilized an external organization to design the survey and conduct its analysis and evaluation.

Results of the evaluation
As a result of the deliberations, the Board of Directors was rated highly for its appropriate ratio of independent outside directors who participate constructively in discussions, and was evaluated as functioning effectively. At the same time, in order to further improve effectiveness, we recognized the need to strengthen discussions related to strategy in view of the significant changes in the environment surrounding the Company, and the need for the Nomination and Compensation Committee and the Board of Directors to further strengthen its efforts in supervising management succession to achieve sustainable growth. Taking these issues into account, the Board of Directors will strive to function more effectively.

Overview of Board Member's Compensation System

The Group's compensation system for directors and executive officers (hereafter, "directors") was established to fulfill two objectives:

to raise awareness of the contributions of managing directors and executive officers in expanding business performance and increasing medium to long-term corporate value
to fulfill appropriate governance functions towards the execution of business duties for non-managing directors.

Compensation System	Compensation Table	Applicable to		Policy for Determining Compensation
Compensation System	Compensation Table	Managing directors	Non-managing directors	Policy for Determining Compensation
(a) Basic Compensation	Table of Pre-determined Compensation Based on Duties	○	○	Managing directors are paid a monthly pre-determined compensation based on the grade assigned to their duties in the execution of the business. Compensation for non-managing directors is determined through a comprehensive assessment of a director's social status, degree of contribution to the Company, and circumstances of appointment.
(b) Performance-based Bonus Ratio in compensation： 10% to 15%^*1	Quantitative assessment (80%) Consolidated revenue: Consolidated profit for period 50%　　：　　50%	○	×	Performance-based bonuses are paid once a year to managing directors (bonuses are not paid to non-managing directors). The calculation method for the bonus paid to each individual is stipulated in the rules established by the Nomination & Compensation Committee. In particular, bonuses for each managing director are based on an evaluation consisting of quantitative items, such as revenue and profit, and qualitative items relating to the execution of business duties. The standard ratio of quantitative to qualitative items in bonus evaluations is 8:2. This bonus ranges from 15% to 20% of an individual's total compensation (a+b+c), and is designed so that the higher an individual's position, the higher the ratio of the bonus.
	Qualitative assessment (20%)	○	×
(c). Performance-based Stock Compensation Ratio in compensation： 15% to 20%^*1	Fixed grants (50%)	○	○	The objectives of performance-based stock compensation are to clarify the link between director compensation and the Group's performance, and to raise awareness of contributions to improving business performance and medium to long-term corporate value. This compensation consists of performance-based grants, based on the degree of achievement of performance targets, and fixed grants, based on an individual's role. Performance-based grants are only paid to managing directors, while fixed grants are paid annually to both managing and non-managing directors. The standard ratio of performance-based grants to fixed grants for managing directors is 1:1. The performance indicators related to performance are consolidated revenue and consolidated EBITDA. This bonus ranges from 15% to 20% of an individual's total compensation (a+b+c), and is designed so that the higher an individual's position, the higher the ratio of the bonus. The shares granted under this system will be held continuously until one year has passed after a director's resignation.
	Performance-based grants (50%) Consolidated revenue: Consolidated EBITDA 50%　　：　　50%	○	×

*1 The higher an individual's position, the higher the ratio of the bonus.
*2 Neither (a) nor (b), nor (c) is paid to non-managing directors.

Actual Board Member's Compensation

Status of Shareholders

Shareholder Composition

	Financial Institution	Financial Services Provider	Other Corporation	Foreign Corporation	Individual and Other Entity	Total
Number of shareholders	12	24	44	153	3,808	4,041
Number of shares held	5,926,359	266,509	15,024,381	7,576,610	5,548,757	34,342,616
Ratio^*2	17.3%	0.8%	43.7%	22.1%	16.2%	100.0%

*1 As of end February 2023
*2 The holding ratio is calculated after deducting treasury stock (228,554 shares).

Status of Majority Shareholders

Shareholder Name	Number of shares held	Ratio^*2
IW.DX Partners Inc.	7,643,470	22.22%
Toshiba Digital Solutions Corporation	4,604,700	13.39%
The Master Trust Bank of Japan, Ltd. (Trust Account)	3,241,200	9.42%
Custody Bank of Japan, Ltd. (Trust Account)	1,501,800	4.37%
Monolith LLP	1,400,000	4.07%
PKSHA Technology	1,247,700	3.63%
NORTHERN TRUST CO. (AVFC) RE UKUC UCITS CLIENTS NON LENDING 10PCT TREATY ACCOUNT	1,034,900	3.01%
GOVERNMENT OF NORWAY	697,600	2.03%
Suzuyo & Co., Ltd.	537,300	1.56%
JP MORGAN CHASE BANK 380684	421,500	1.23%
Others	12,070,516	35.09%
Grand total (excluding own stocks)	34,400,686	100.00%

*1 As of end October 2023
*2 Total number of issued shares as of end October 2023. The holding ratio is calculated after deducting treasury stock (228,584 shares).

Name	Structure			Basic Policy on Structure
Board of Directors	8 in total	Chairman	Inside (Hiroyuki Uchino)	The Group believes that the Board of Directors and the Audit & Supervisory Board should be made up of directors with abundant experience, insight, and expertise in management and business.
		Inside Directors	4
		Outside Director	4
		Those who are Independent Outside Directors	3
Audit & Supervisory Board	3 in total	Chairman	Outside (Shigeki Iwashita)
		Internal Auditor	0
		Outside Auditor	3
		Those who are Independent Outside Auditors	3
Nomination & Compensation Committee	5 in total	Chairperson	Inside (Hiroyuki Uchino)	The committee comprises three to seven members. Members are elected, by a Board of Director's resolution, from among the representative directors and Chairman of the Board of Directors, independent outside directors, and independent outside auditors. The majority of the committee members are outside directors.
		Inside Directors	2
		Outside Director	3
		Those who are Independent Outside Directors	3
Sustainability Committee	5 in total	Chairperson	Inside (Sustainability Officer)	The Committee is chaired by the Sustainability Officer, and is comprised of the President, the Executive Officer in charge of finance, the Executive Officer in charge of technology, and the Executive Officer in charge of marketing.
		Inside Managing Officer	5 (of which 2 are directors)
		Outside Officer	0
		Those who are Independent Outside Officers	0

Name	Role
Nomination & Compensation Committee	The Nomination & Compensation Committee was established as an independent body to ensure transparency in the appointment and dismissal of directors, in their evaluation and remuneration, and in the succession plan for the President and CEO. The Board of Directors decides on the appointment and dismissal of directors, remuneration, and other related actions, after prior consultation with the committee.
Sustainability Committee	The Sustainability Committee aims to maximize the effects of the Group's sustainability activities while ensuring that management and employees have a shared understanding. The Sustainability Committee holds monthly meetings to share trends in sustainability and discuss the status of the Group's efforts to address the expectations of stakeholders.
Risk and Compliance Committee	The Risk and Compliance Committee, chaired by the President of the Company, was established to manage risks related to business, including compliance risks associated with the violation of laws, regulations and notices, and unethical practices. The Committee strengthens the company's compliance with laws, regulations, and articles of incorporation. In addition, we have put in place a compliance consultation line to facilitate the early detection of violations of laws and regulations and appropriate responses.
Information Security Committee	The Information Security Committee was established as a subordinate body of the Risk and Compliance Committee to develop basic policies and implementation procedures regarding the management of information assets, conduct evaluations and analyses, and handle the leakage of information assets and other incidents. The Committee aims to manage and operate the company's information assets properly.

Director/Auditor		Managing Director	Nomination & Compensation Committee Member	Business Management/ Corporate Strategy	Cloud/ Software	R&D/ Develop ment	DX/Data Business	Marketing/ Branding	Security/ Risk Management/ Legal Affairs	Financial Accounting/ Taxation	Internal Control Governance	Sustaina bility
Hiroyuki Uchino	Inside		●	●	●		●
Jun Tanaka	Inside	●	●	●	●	●	●	●				●
Ko Shimazawa	Inside	●		●	●	●	●		●			●
Taisuke Fujimoto	Inside	●		●	●				●	●	●	●
Kotaro Yamazawa	Outside		●	●					●	●	●	●
Takao Yajima	Outside		●	●	●	●	●	●
Shunsuke Okada	Outside			●	●		●
Kaori Iizumi	Outside		●	●				●	●
Nagako Oe	Outside								●		●
Yoshitaka Asaeda	Outside									●	●
Shigeki Iwashita	Outside									●	●

Classification	Number of officers	Total compensation	Total compensation by type
Classification	Number of officers	Total compensation	Basic compensation	Performance-based bonus	Performance-based stock bonus
Director (Outside director)	8 (4)	￥311M (￥33M)	￥186M (￥29M)	￥57M (－)	￥67M (￥4M)
Auditor (Outside auditor)	4 (4)	￥28M (￥28M)	￥28M (￥28M)	－　 (－)	－　 (－)
Total (Outside officer)	12 (8)	￥339M (￥61M)	￥214M (￥57M)	￥57M (－)	￥67M (￥4M)

CORPORATE GOVERNANCE

Overview of Corporate Governance

Organization Chart

Inside Director

Outside Director

Outside Auditor

Evaluation of the Effectiveness of the Board of Directors

Overview of Board Member's Compensation System

Status of Shareholders

Status of Majority Shareholders

Organization Chart

Composition of the Board of Directors

Main Committee Responsibilities

Skills Matrix

Actual Board Member's Compensation

Outside Director

Outside Director

Outside Director

Outside Director

Outside Auditor (Full-time)

Outside Auditor

Outside Auditor

Outside Director

CORPORATE

GOVERNANCE

Outside Auditor
(Full-time)