Corporate Governance

Highly Independent Board of Directors

In order to ensure our independence as an asset management company and to conduct effective corporate governance, we have four out of the seven Directors who are from other organizations than our shareholders. The Company invites three Outside Directors with abundant knowledge in domestic and overseas corporate management and human capital management, and in the investment management business fields to supervise the status of management execution and conflicts of interest with shareholders from an independent standpoint and give advice to our management team based on their respective experience and expertise. In addition, in order to verify whether the functions expected of the Board of Directors are properly performed and to improve them, the effectiveness of the Board of Directors is evaluated every fiscal year through a questionnaire survey of Directors and Audit & Supervisory Board members.

Outside Directors

Jun Arai

Date of appointment	April 1, 2019
Attendance rate at the Board of Directors meetings	100% (13/13)　<for FY2023>
Career Summary	August 2008: Acting President and Representative Director, Showa Shell Sekiyu K.K. November 2008: Representative Director and President, Showa Shell Sekiyu K.K. March 2013: Representative Director and Group Chief Operating Officer, Showa Shell Sekiyu K.K. March 2014: Representative Director and President, Showa Yokkaichi Sekiyu Co., Ltd. April 2016: Representative Director and President, Showa Yokkaichi Sekiyu Co., Ltd. and Director, Daiwa SB Investments Ltd.
Major Concurrent Positions	Corporate Auditor, Ryohin Keikaku Co., Ltd.

Hiroko Sasaki

Date of appointment	October 7, 2022
Attendance rate at the Board of Directors meetings	92% (12/13)　<for FY2023>
Career Summary	October 2010: President & CEO, HYS corporation (formerly ChangeWAVE Inc.) (incumbent) September 2016: President & CEO, ChangeWAVE Group, Inc. (formerly Lyxis Co., Ltd.) (incumbent)
Major Concurrent Positions	Director, SoftBank Corp.

Naoya Orime

Date of appointment	June 26, 2024
Attendance rate at the Board of Directors meetings	-----　<for FY2023>
Career Summary	April 2007: Representative Director,Western Asset Management Company Ltd

As of June 26, 2024
Attendance rates are rounded to the nearest whole number.

Establishment of Internal Committees of Board of Directors

We have established the Nominating Committee of Directors, the Nominating Committee of Executive Officers and the Responsible Investment Committee as internal committees of the Board of Directors. Each of these committees is composed of Outside Directors, and plays an important role in ensuring appropriate business execution and fair internal personnel management.

Committee Name	Members	Purpose
Nominating Committee of Directors	President and Director, and Outside Directors	The purpose is to deliberate matters concerning personnel affairs, remuneration, and bonuses of Directors and to advise the Board of Directors.
Nominating Committee of Executive Officers	Directors (including Outside Directors)	The purpose is to deliberate matters concerning the personnel affairs, remuneration, and bonuses of Executive Officers and to advise the Board of Directors.
Responsible Investment Committee	An Outside Director who meets the independence standards set forth separately, the Responsible Investment Officer, and the officer in charge of the Compliance Department	The purpose of this committee is not only to review that the Company properly fulfills its fiduciary duties including initiatives for responsible investment and that there is proper management of the potential for conflicts of interest, but also to make recommendations to the Board of Directors for further improvements.

SMDAM's Remuneration Policy and "Principles of Fiduciary Duties and Sustainability"

In order to realize of our vision to become ‘The Best Asset Management Firm for Your Better Quality of Life”, Sumitomo Mitsui DS Asset Management (hereafter “SMDAM”) has a remuneration policy in place to ensure, as stated in Principle 4 of its “Principles of Fiduciary Duties and Sustainability”, that all employees with diverse values are able to perform at their best by rewarding them in a fair and appropriate manner to their roles, responsibilities, and performance. Moreover, elements of the “Principles of Fiduciary Duties and Sustainability” have been incorporated in our personnel evaluation process as follows:

Employee compensation consists of a salary determined by each individual's expected role and a bonus linked to both company and individual performance.
The salary is determined based on the level of tasks undertaken and the degree of their execution. In addition to the "job-based" aspect, which is based on tasks, there is also a "membership-based" aspect that evaluates contributions beyond individual tasks, such as teamwork, collaboration with other departments, and the development of junior employees.
Bonuses are determined based on individual performance evaluations, taking into account the bonus pool linked to the company's performance. Each individual's performance is evaluated annually based on the achievement of qualitative and quantitative goals set at the beginning of the period through discussions with their supervisor.
For investment managers in particular, quantitative targets such as investment performance carry significant weight in performance evaluations. In our company, all managers engaged in active management are required to operate in accordance with our basic ESG investment policies, considering ESG factors that are critical to the sustainability of the companies we invest in. This approach demands not only the achievement of investment returns but also contributions toward the realization of a sustainable society. Furthermore, in determining compensation, we place emphasis on quantitative evaluations based on medium-term performance over 3 to 5 years, incorporating the sustainability of the investment targets into the evaluation process.
In addition, the compensation and bonuses for executives are determined by the Board of Directors based on the advice of the Personnel Committee, which includes highly independent outside directors (for directors), and the Expanded Personnel Committee (for executive officers and others). This process ensures transparency and objectivity from the perspective of effective corporate governance. In addition to being linked to company performance, executive compensation also reflects sustainability factors, thereby establishing an evaluation system committed to addressing sustainability challenges.