With the aims of regularly verifying that the Board of Directors is functioning appropriately and identifying issues to resolve for continuing improvement, the Company undertakes an evaluation of the effectiveness of the Board of Directors each year, and discloses the summary of the evaluation results. Based on this policy, the tenth evaluation was conducted in FY2024. The evaluation method and summary of the results are as follows.
[Evaluation Method]
At the meeting of Outside Directors and Audit & Supervisory Board Members held in August 2024, we conducted a mid-term review of the progress of the action plan extracted from the previous evaluation of effectiveness, and discussed the implementation method of the 2024 effectiveness evaluation.
As a result, it was decided that the FY2024 effectiveness evaluation would adopt the self-evaluation method by the Board of Directors, which had been validated for its appropriateness by the third-party evaluation in the previous assessment.
Additionally, it was confirmed that a third party evaluation organization would continue to be appointed approximately every three years for the purpose of validating the appropriateness of the Board of Directors secretariat's evaluation, analysis, and drafts of improvement proposals.
Subsequently, FY2024's implementation policy and evaluation items were deliberated at the meeting of the Board of Directors meeting held in November 2024, including the content and composition of the questionnaire prepared by the Board of Directors secretariat.
Based on the content of this deliberation, a completely anonymous questionnaire survey (on the Web) of all Directors and Audit & Supervisory Board Members was performed with the evaluation items as follows. After the Board of Directors secretariat conducted consolidation and analysis of results of respondents to the survey, results of the consolidation and analysis, and future challenges and initiatives were discussed at the meeting among Outside Directors and Audit & Supervisory Board Members, and Representative Directors in January 2025, and the evaluation results were confirmed at the Board of Directors meeting in February.
[Evaluation Items]
The survey items for FY2024 are as follows. Each question was rated to one of four levels, with many questions having a free-response field in order to capture specific opinions.
Chapter 1 Self-evaluation
Chapter 2 Composition of Board of Directors
Chapter 3 Operation of the Board of Directors
Chapter 4 Support System for the Board of Directors
Chapter 5 Roles and Responsibilities of the Board of Directors
Chapter 6 Relations with Investors and Shareholders
Chapter 7 The Nomination and Compensation Advisory Committee
Chapter 8 Actions on the Previously Prepared Action Plan
Chapter 9 Comments
[FY2024 Initiatives Based on the Previous Year's Effectiveness Evaluation]
The following are the initiatives for FY2024 based on the results of the FY2023 Board of Directors effectiveness evaluation.
1. Enhance discussions regarding strategies
• Conducted a comprehensive analysis and review of INPEX Vision@2022 in advance.
• Secured sufficient discussion opportunities at the beginning of the year for the formulation of the next Medium-term Business Plan and Vision, ensuring broad discussions on positioning, target indicators, and the planning process.
2. Further stimulate discussion at Board of Directors meetings
• Continued to include key discussion points from Executive Committee meetings in Board of Directors meeting materials.
• Strengthened collaboration among Board members through social gatherings and ensured opportunities for engagement and exchange of opinions with executive officers.
• Pursued more efficient Board operations by continuing pre-meeting briefings and focused agenda items while adjusting the frequency and method of reporting on regular matters.
• Held a lecture and discussions session by AI experts on the theme of AI and the energy industry to enhance the knowledge of Board members.
3. Enhancement of the function of the Nomination and Compensation Advisory Committee
• Strengthened the objectivity and independence of the Nomination and Compensation Advisory Committee by appointing an independent Outside Director as chairperson and ensuring that three of the four committee members were independent Outside Directors.
• The chairperson provided feedback to the Board of Directors on the annual deliberations of the Nomination and Compensation Advisory Committee, including the succession plan for the Representative Director, President & CEO.
4. Deeper discussions regarding the desired state of the Board of Directors
• Discussed Director candidates for the March 2025 General Meeting of Shareholders in the Nomination and Compensation Advisory Committee from the perspective of further enhancing Board diversity. The Board selected appropriate candidates based on these discussions.
[Summary of FY2024 Evaluation Results]
Based on discussions in meetings between Outside Directors, Audit & Supervisory Board Members, and the Representative Director, as well as deliberations in Executive Committee meetings and Board of Directors meetings, the following evaluation results regarding the effectiveness of the Board of Directors in FY2024 were confirmed.
• Regarding the composition of the Board of Directors, the knowledge and experience of its members are sufficiently diverse. Although the size of the Board of Directors and the ratio of Outside Directors are generally appropriate under the current circumstances, going forward, diversity should be further enhanced by increasing the number of female directors and appointing directors of foreign nationality.
• Initiatives to stimulate discussion at Board of Directors meetings, such as holding pre-meeting briefings, sharing discussions at Executive Committee meetings, etc., and explaining and annotating technical terms, are all effective and should be continued.
• By holding lectures by outside experts, tours of operation sites in Japan and overseas, and free discussions inside and outside the Board of Directors, non-Executive Officers should be provided with opportunities to improve their knowledge, and collaboration among board members and with Executive Officers should be further strengthened.
• Regarding the relations with investors and shareholders, we recognize the importance of dialogue with the market and strive for proactive communication and relationship building, and should continue to enhance our efforts.
• The Nomination and Compensation Advisory Committee's independence and objectivity have been ensured and it has played a necessary role in deliberations in the fields of both nomination and compensation, etc. Going forward, efforts to strengthen cooperation with the Board of Directors should be further promoted.
As a result of the summary of the individual evaluation results including the above, the Board of Directors as a whole in FY2024 was evaluated as being sufficiently effective overall as in the previous year.
[Initiatives for Further Improvement of Effectiveness]
The following action plans have been established to further ensure the effectiveness of the Board of Directors going forward.
1. Enhance discussions regarding strategies
• Clarify the positioning and relevance of each agenda item presented to the Board within the Medium-term Business Plan and Vision.
• Establish dedicated deliberation items for strategies that have a significant impact on achieving the plan, ensuring prompt and decisive management decisions based on thorough discussions.
• Secure opportunities for open discussions within and outside the Board of Directors regarding the business environment and related fields as necessary.
2. Stimulate discussion at Board of Directors meetings
• Continue various efforts for information sharing and improvement of case understanding, such as introducing the points of discussion at management meetings, explaining technical terms, and providing materials early.
• Establish opportunities for appropriate interaction and exchange of opinions, including with individuals outside the Board of Directors members.
• Secure opportunities for site visits to domestic and international locations to support discussions on business strategy.
• Plan and implement lectures by external experts to enhance Board members' knowledge of environmental policies and regulations, technological trends, and M&A developments in key business countries.
• Continuously review optimal methods for evaluating the effectiveness of the Board of Directors meetings.
3. Enhancement of the function of the Nomination and Compensation Advisory Committee
• Enhance information sharing between the Nomination and Compensation Advisory Committee and the Board of Directors meeting by reporting not only on deliberation results but also on deliberation plans and discussion progress.
• Report on the deliberation status of Director nominations and performance-based compensation in the Nomination and Compensation Advisory Committee, along with updates on the consideration of the Representative Director, President & CEO succession plan.
• As in the past, discuss the combination of skills that the Board of Directors should have in the Nomination and Compensation Advisory Committee in relation to achieving the Medium-term Business Plan, select suitable candidates, and submit recommendations to the Board.
4. Deeper discussions regarding the desired state of the Board of Directors based on INPEX Vision 2035
• Deepen discussions in the Nomination and Compensation Advisory Committee on increasing Board diversity, including appointing more women and executives with foreign nationality or experience in different industries.
• Define the roles of Directors and the Board based on the Company's characteristics, review criteria for Board agenda items, and discuss optimal governance structures as needed.
Based on these evaluation results, the Company will continue striving to improve the effectiveness of the Board of Directors.