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 financial and economic 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

Noriyuki Yanagawa

Date of appointment	June 27, 2016
Attendance rate at the Board of Directors meetings	100% (13/13)　<for FY2022>
Career Summary	April 1993: Full-time lecturer, Faculty of Economics, Keio University April 1996: Assistant Professor, Graduate School of Economics, the University of Tokyo April 2007: Associate Professor, Graduate School of Economics, the University of Tokyo December 2011: Professor, Graduate School of Economics, the University of Tokyo (incumbent)
Major Concurrent Positions	Director, ORIX Corporation

Jun Arai

Date of appointment	April 1, 2019
Attendance rate at the Board of Directors meetings	100% (13/13)　<for FY2022>
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	100% (6/6)　<for FY2022> *Listed in the number of meetings held since appointment.
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, UT Group Co., Ltd.

As of January 1, 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:

Employees’ total remunerations consist of base salaries and performance-based bonuses. Base salaries are determined by each employee’s role, position grade, and performance. On the other hand, the performance-based bonuses are linked to the performance of both each person and the firm. At SMDAM, these factors are assessed by two methodologies: 1) behavioral assessment and 2) performance review.
Base salaries are determined by behavioral assessments taking into consideration performance reviews partly. Behavioral assessments are measured at the individual level of fulfillment of expected behaviors defined by the “Job Description” in accordance with their roles and position grade. For all employees, one of the key criteria is a contribution to “Our Values” which is a part of our mission statement and also the guidelines for action to implement the “Principles of Fiduciary Duties and Sustainability” through SMDAM’s corporate activities.
Based on the annual bonus pool linked to SMDAM’s overall business results, employees’ performance-based bonuses are paid according to the individual performance which is evaluated based on the level of achievement of both quantitative and qualitative targets set through a meeting with the line manager at the beginning of the fiscal year.
Notably for fund managers, the investment performance occupies a major part of performance review as a quantitative target. At SMDAM, all active fund managers are required to manage funds with the consideration of ESG complying with our ESG policy as it is crucial to maintain investees companies’ sustainability and to generate investment returns as well as to contribute to the realization of a sustainable society. Furthermore, fund managers’ bonuses are mainly determined by their mid-term (3-5 years) performance with a view to assessing the investee companies’ sustainability as well.
In addition to all above, from the sound corporate governance perspective and also as a measure of ensuring transparency and objectivity, remunerations of SMDAM’s directors and executive officers are discussed at the nomination committee and approved by the board meeting, both of which include highly independent outside directors.