◎Performance Evaluation of Board of Directors and Functional Committees
The Guidelines for Performance Evaluation of Board of Directors and Functional Committees state that
the board of directors and functional committees shall perform performance evaluation at least once
a year. Board evaluation shall be performed by external independent agencies or teams of experts and
scholars at least once every three years. Results of internal and external board evaluation shall be
completed within three months after the end of a year. The evaluation criteria for the board of
directors and functional committees shall include at least the five criteria below:
a. Director participation
b. Quality of meeting discussions and decisions
c. Board composition and structure
d. Education and training completed by directors
e. Corporate governance and culture
Every year, when all questionnaires are completed and collected, the Corporate Governance Evaluation
Task Force follows the guidelines above to perform analysis, and includes quantitative indicators
before presenting the report to the board of directors and making recommendations for improvement
at the same time.
Recommendations for improvement from the 2021 internal evaluation:
a. Attending by video conference can be made an option available to directors who are unable to attend
shareholders meetings in person.
b. Courses can be decided after the Nomination Committee has discussed course contents and considered
the backgrounds of the directors, newly amended regulations, and industry characteristics.
The report on performance evaluation of the board and its members was approved in the board meeting
on March 25, 2022.
◎ External board performance evaluation
The Company hires an external institution to perform an external board performance evaluation every
three years. The latest was when the Company received an external board performance evaluation report
from KPMG on February 18, 2022. KPMG performed evaluation of the board of directors of Wisdom Marine
Lines between December 22, 2021 and February 18, 2022. KPMG evaluated the board based on 88 items in
nine criteria and the board members based on 27 items in six criteria.
KPMG concluded that the board of directors of Wisdom Marine Lines had made policies and processes
according to the applicable regulations and domestic governance indicators. The board of directors
consists of directors with relevant skills and training, and responsibilities are allocated according
to experience in order to ensure the board and functional committees work effectively. The overall
performance was rated between good and excellent. Room for improvement in the board of directors was
still identified in some of the nine criteria, such as an effective board, professional development
and continuing education, and fulfillment of responsibilities.
KPMG made the following recommendations:
a. Although key operations such as business risk management, ethical management, and ESG/CSR
fulfillment take place in practice, they are not reported formally to the board of directors.
This may lead to external directors being less familiar with these operations.
b. It was found that the company provided information on a director's role and responsibilities
whenever a director took office. It should be required to provide directors with information on
assuming the role. Given the board of directors consists mainly of independent directors and
onsite visits are difficult to arrange for directors of a shipping company, more information on
the business should be provided in the director's guide so to help new directors gain more quickly
an understanding of the company's operations and industry trends and fulfill their responsibilities.
c. It was understood that the directors held extensive discussions on key business risks, such as
the debt ratio and energy saving and carbon reduction trends. According to the Corporate Governance
3.0 - Sustainable Development Roadmap, the design and operation of business risk management is to
be supervised by a risk management committee or an audit committee. Wisdom Marine Lines does not have
a risk management committee at present, and business risk management must be overseen by the Audit
Committee under the risk management framework. In addition to optimizing existing business risk
management mechanisms, all aspects and areas of risks should be considered in order to identify key
areas to focus on in different stages. The Company plans to follow KPMG' recommendations and make
plans for improvement as part of the continuing effort to reinforce the role of the board of directors.