Corporate Governance Business Management System

Directors

Reason for Appointing Outside Directors

Mr. Masaya Futamiya has wide-ranging knowledge and impressive insight into corporate management accumulated from his extensive experience as a management member at Sompo Japan Nipponkoa Insurance Inc. Based on the above, we determined that he will appropriately supervise the execution of our business.

Ms. Masako Arakawa has extensive experience and a high degree of expertise gained in her career in the real estate business, as well as her experience as an External Director at a public company and impressive knowledge regarding corporate governance. Based on the above, we determined that she will appropriately supervise the execution of our business.

Ms. Mari Ebisui has cultivated extensive experience and impressive knowledge in accounting based on a global perspective as a Certified Public Accountant in the United States, and also has insight on corporate internal control and business ethics as a Certified Fraud Examiner. Accordingly, the Company believes that she is an appropriate for External Director, and proposes that she be elected.

Ms. Atsumi Harasawa has professional experience and knowledge accumulated as a lawyer, and experience and insight as an external officer of listed companies. Accordingly, the Company believes that she is an appropriate candidate for External Director, and proposes that she be elected.

Mr. Keiichiro Uesugi has experience and insight in management strategy at a major office and precision equipment manufacturer. Accordingly, the Company believes that he is an appropriate candidate for External Director, and proposes that he be elected.

Mr. Takashi Ichinose has wide-ranging knowledge and deep insight into corporate management based on his extensive experience as an operator of a listed company, a company affiliated with a large electrical machinery manufacturer, etc.
The Company has appointed him as an Outside Director because he is expected to contribute to enhancing the supervisory function of the Board of Directors and realizing fair and highly transparent management through valuable opinions and guidance on the Company’s management based on the above.
The Company also judged, based on its criteria for assessing the independence of external directors, that there was no risk of a conflict of interest arising between Mr. Ichinose and general shareholders and deemed him sufficiently independent.

Mr. Nobuhisa Zama has wide-ranging knowledge and impressive insight related to the finance industry based on his extensive experience and impressive track record in corporate management as a member of senior management at a major banking group.
The Company has appointed him as an Outside Director because he is expected to contribute to enhancing the supervisory function of the Board of Directors and realizing fair and highly transparent management through valuable opinions and guidance on the Company’s management based on the above.

Mr. Tokio Kawashima has many years of experience working at a major financial institution, a considerable degree of insight on treasury and accounting, and extensive experience and impressive knowledge accumulated by serving as Full-time Audit & Supervisory Board Member of a listed company. Accordingly, the Company believes that he is an appropriate for External Director who is an Audit & Supervisory.

Ms. Hiromi Nakazawa has expertise in finance and accounting as a certified public accountant and extensive experience and impressive knowledge as an executive officer and auditor of a listed company.
The Company has appointed him as an Outside Director because he is expected to contribute to enhancing the supervisory function of the Board of Directors and realizing fair and highly transparent management through valuable opinions and guidance on the Company’s management based on the above.
The Company also judged, based on its criteria for assessing the independence of external directors, that there was no risk of a conflict of interest arising between Ms. Nakazawa and general shareholders and deemed her sufficiently independent.

Mr. Toru Miyama has experience as a lawyer and advanced knowledge particularly of corporate legal affairs and also has experience and knowledge as an external officer of a listed company.
The Company has appointed him as an Outside Director because he is expected to contribute to enhancing the supervisory function of the Board of Directors and realizing fair and highly transparent management through valuable opinions and guidance on the Company’s management based on the above.
The Company also judged, based on its criteria for assessing the independence of external directors, that there was no risk of a conflict of interest arising between Mr. Miyama and general shareholders and deemed him sufficiently independent.
He has no experience in working directly in corporate management other than as an external officer, but for the reasons given above, the Company believes that he would be able to appropriately fulfill her responsibilities as an External Director.

Audit and Supervisory Committee

Independent Officers

Incentives

• Remuneration for Directors (excluding External Directors) consists of fixed remuneration, bonus linked to performance in a single fiscal year (short-term incentive) and stock-based remuneration (medium- and long-term incentive).
• The stock-based remuneration system aims to improve awareness of contributing to an improvement in medium- and long-term results and increases in corporate value. It will do this by further clarifying the connection between remuneration for Directors and share prices of the Company and Directors while sharing the profits and risks caused by share price changes with all shareholders. This system was introduced upon approval at the 43rd Ordinary General Meeting of Shareholders held in June 2019. Due to the transition to a Company with an Audit & Supervisory Committee, a new remuneration limit for Directors in this system was resolved at the 44th Ordinary General Meeting of Shareholders held in June 2020.
• The system is a stock-based remuneration system in which a trust established by the Company contributing cash (Trust) acquires shares of the Company, and the Company provides the number of shares of the Company equal to the number of points granted to Directors via the Trust. Also, the time at which Directors receive shares of the Company is, in principal, at retirement as Director.

Remuneration of Directors

• Since we do not have a Director the total amount of whose remuneration, etc. is at least 100 million yen, we do not disclose individual cases of remuneration.

The policy for determining the compensation of Directors (including determining individual remuneration) is as follows.

1. Basic Policy

The Company considers officers' compensation as an effective way of incentivizing officers to realize sustainable improvement in business results over the medium and long term which will in turn enhance the corporate value of the Company and Group companies (shareholder value) and determines compensation based on the following policy, with a view to strengthening corporate governance.
(1) We will create a structure for compensation which is commensurate with the roles and responsibilities officers are expected to fulfil.
(2) We will adopt compensation which enhances our business results and corporate value (shareholder value) and aligns the interests of officers with those of shareholders.
(3) We will ensure a level of compensation which allows us to appoint (recruit) and retain talent.
(4) We will strive to make the process for determining compensation objective, transparent and appropriate to be accountable to shareholders and other stakeholders.
More specifically, compensation for Directors will be composed of basic compensation as fixed compensation and performance-linked bonuses and share compensation, and we will pay basic compensation only to Directors who are members of the Audit & Supervisory Board and Outside Directors, from the viewpoint of their role of exercising appropriate supervision and their independence.

2. Policy for determining the compensation of each Director individually, including basic compensation (cash compensation) (including the policy for determining when remuneration is to be provided and the conditions for providing it)

Basic compensation for Directors of the Company is monthly fixed compensation (a fixed amount based on rank).
The Board of Directors of the Company determines a rank-based basic compensation table created based on a report by the Nominating and Compensation Committee, giving comprehensive consideration to the importance of the role and responsibilities assumed by Directors, the level compared with other companies in the same industry and companies of a similar scale, and the Company's business results and the level of employee salaries, and it determines the basic compensation of individual officers based on this rank-based basic compensation table.

3. Policy for determining details and amounts of performance-linked remuneration and non-cash remuneration and determining their calculation methods (including the policy for determining the time or conditions for giving remuneration)

Performance-linked bonuses, which fall into the category of performance-linked remuneration, are cash compensation intended to reflect the outcome of efforts to improve business results each fiscal year and they are paid at certain times each year.
The Representative Director, President and CEO of the Company is authorized to decide the individual amount of the performance-linked bonus for each Director based on a formula determined by the Board of Directors of the Company, taking execution of duties by each Director into consideration.
Performance-linked bonus calculation formula ＝ Consolidated operating profit for the fiscal year in question × Ratio of attainment of consolidated operating profit target for the fiscal year in question × ROA × Scores for happiness × Rank-based multiplying factor × Evaluation based on execution of duties (1.25～0.7）
*Employee engagement survey score
The Representative Director, President and CEO of the Company is authorized to make this decision because he is best placed to evaluate execution of duties by each Director from the perspective of the Company's overall business results. To ensure that this authority is exercised properly by the Representative Director, President and CEO of the Company, the Representative Director, President and CEO of the Company consults the Nominating and Compensation Committee over the evaluation of each Director and determine the evaluation of the execution of duties in accordance with a report by the Nominating and Compensation Committee.
However, evaluation of the Representative Director, President and CEO (the “President”) based on execution of duties is determined by the Nominating and Compensation Committee after discussions between the President and the Committee regarding goal setting and evaluation.
The purpose of the share compensation, which falls into the category of non-cash remuneration, is to motivate Directors to contribute to improvement of business results and enhancement of corporate value in the medium and long term by further clarifying the link between their contribution and compensation and to make them share the benefits and risks of share price fluctuations with shareholders. The Company contributes money to establish a trust (hereinafter, the “Trust”), which acquires shares of the Company, and then shares of the Company in a number corresponding to the number of points granted to each Director are delivered to each Director through the Trust.
The points to be awarded to each Director will be awarded, based on Share Delivery Regulations established by the Board of Directors of the Company, according to rank and achievement of business targets (consolidated operating profit, etc.), on a point granting date specified in the Share Delivery Regulations within the trust period (which expires at the end of August 2024).
Directors will be eligible to receive delivery of shares of the Company when they retire as a Director, in principle.

4. Policy for determining the amount of basic compensation and the ratio of the amount of performance-linked remuneration, etc. or non-cash remuneration, etc. to the amount of remuneration, etc. for individual Directors

The percentage of each type of compensation for Directors is set so that the weight of share compensation, which acts as a medium-to-long-term incentive, increases according to the right of representation, using compensation levels at companies of a similar scale to the Company or companies of a similar type as a benchmark. The yardstick for the ratio of each type of remuneration is that the ratio of basic compensation to performance- linked remuneration plus non-cash remuneration is 1: 1.
（Assuming 100% achievement of KPIs）
Outside Director (excluding Directors who are Audit & Supervisory Committee members): Basic compensation (100%)
Representative Director: Basic compensation (50%)+ Performance-linked bonus (35％) + Share compensation (15％)
Director: Basic compensation (50％) + Performance-linked bonus (37％) + Share compensation (13％)

5. Policy for determining other content regarding remuneration, etc. for individual Directors

The Company will establish a Nominating and Compensation Committee for the purpose of ensuring that compensation for Directors is determined objectively, transparently and appropriately.
The Nominating and Compensation Committee is positioned as an advisory body within the Board of Directors and consists of independent Outside Directors (excluding Directors who are Audit & Supervisory Committee members) only.
The Committee deliberates whether the compensation plan and level of compensation for Directors is in line with policies and reports the results of its deliberations to the Board of Directors and the Board of Directors determines compensation for Directors in light of these results.
If unexpected special factors (including, but not limited to extraordinary natural phenomena, sharp fluctuations in foreign currency exchange rates, misconduct, organizational restructuring, etc.) arise at the time of determining remuneration, etc. of Directors, discretionary decisions may be incorporated in a resolution of the Board of Directors, as necessary, after deliberations at an extraordinary meeting of the Nominating and Compensation Committee.
Starting in fiscal year 2022, the Company decided to introduce ROA, a capital efficiency index, as a new evaluation indicator in addition to the existing evaluation indicators used in the bonus calculation formula. Moreover, with the aim of promoting corporate value creation through target achievement, the Company decided to incorporate an employee happiness score, which is a non-financial indicator, in the bonus calculation formula and ESG evaluation, which is also a non-financial indicator and an indicator for ESG-related activities, in the share compensation calculation formula, respectively.
With regard to the evaluation of the President based on the execution of duties, the Nominating and Compensation Committee will determine the evaluation after discussions between the President and the Committee regarding goal setting and evaluation. Based on decisions of the Committee on these matters, the President will ask the Committee again for advice on evaluation based on the execution of duties of each Director, including the President, and determine such evaluation in line with the content of recommendations of the Committee.

General Outline of Corporate Governance System

(1)Execution of business

In addition to statutory bodies such as the General Meeting of Shareholders, the Board of Directors, and the Audit & Supervisory Committee, the Company has established advisory organizations to assist the Board of Directors or the President and Executive Officer in making decisions.

＜The Board of Directors＞
The Board of Directors of the Company consists of 13 Directors (including 3 Directors who are Audit & Supervisory Committee members).
Of the 13 Directors, 10 are External Directors (including 3 Directors who are Audit & Supervisory Committee members) who deliberate and make decisions on matters stipulated by laws, ordinances and the Articles of Incorporation and other important matters for management.

＜Executive Officer System and Management Meeting＞
The Company has adopted an executive officer system, in which the Board of Directors appoints Executive Officers, determines their authorities and responsibilities, and delegates them the authority to execute business in order to speed up the decision-making and business execution process. In the execution of business, the President and Executive Officer supervises the business as the chief operating officer in accordance with the business plan and various measures determined by the Board of Directors. The Management Meeting, which is composed of the President and Executive Officer and Executive Officers who satisfy the prescribed requirements, discusses and makes decisions about important matters concerning business execution. The Board of Directors supervises the state of execution of business by each Executive Officer. It also instructs the President and Executive Officer to establish the internal control system, requests a regular report on the policy for the development and operation thereof and the result of its implementation and attempts to continually strengthen the internal control system.

＜Voluntary Committees＞
As an advisory organization for the Board of Directors, the Company established the Nominating and Compensation Committee, which consists of all Independent External Directors. The aim of the Committee is to ensure objectivity, transparency and validity of appointment of Director candidates, appointment and dismissal of the members of the management, establishment and operation of a succession plan for the Chief Executive Officer and decision on Director remuneration.
As other advisory organizations for the President and Executive Officer, the Company established the following committees.

• Disclosure Committee: aimed at effective and efficient disclosure of the Ricoh Leasing Group’s corporate information
• ALM Committee: aimed at appropriate management of assets and liabilities for proper risk management and profit maximization
• Review Committee: aimed at deliberation/determination on review work as well as reporting review-related matters
• Risk Management Committee: aimed at effective and efficient development and promotion of risk management at the Ricoh Leasing Group
• Sustainability Committee: aimed at more effective support for the sustainable management of the Ricoh Leasing Group

(2)Audit and supervision

＜The Board of Directors＞
As a result of the transition to a Company with an Audit & Supervisory Committee, Directors who are Audit & Supervisory Committee Members now have voting rights at the Board of Directors, which has further strengthened the supervisory function of the Board of Directors.

＜The Audit & Supervisory Committee＞
The Audit & Supervisory Committee of the Company audits and supervises the decision-making process of the Board of Directors and the business execution by Directors. It does this through exercising its voting rights in meetings of the Board of Directors, exercising its right to give opinions on nomination and remuneration of Directors (excluding Directors who are Audit & Supervisory Committee Members) in the General Meeting of Shareholders, attending important meetings such as meetings of the Board of Directors and the Management Meeting, inspecting important documents, and investigating the state of business and property. The Audit & Supervisory Committee consists of three members, two of whom are highly independent External Directors. It also has one full-time Audit & Supervisory Committee Member who facilitates the audit by the Audit & Supervisory Committee.
In addition, the Representative Director and the Directors who are full-time Audit & Supervisory Committee Members closely exchange opinions about corporate management based on their respective stewardship responsibilities for shareholders. Furthermore, the Company has adopted a system under which Directors and employees report the statutory matters as well as “matters concerning important facts which are in violation of laws, regulations or the Articles of Incorporation, wrongful acts or facts which are likely to significantly damage the Company and its subsidiaries, if such facts are found,” “result of internal audit and subsidiary investigation,” “state of whistle-blowing made by officers and employees of the Company and its subsidiaries under the whistle-blowing system” and “other matters required by an Audit & Supervisory Committee Member to be reported.”

＜Internal Audits＞
The independent internal audit department has eight staff members who conduct internal audits of the business execution of each business execution department and subsidiary from the perspectives of legal compliance, rationality and efficiency. Audit results are reported to the Representative Director & President and Executive Officer, full-time Audit & Supervisory Committee Members and relevant Officers. When necessary, the audited departments report on their improvement plans and their implementation. The audit results are also reported periodically to the Board of Directors, the Audit & Supervisory Committee and the Corporate Execution Meeting.
The internal audit department conducts internal control assessments, or J-SOX audits, from the perspectives of legal compliance, the effectiveness and efficiency of business, the reliability of financial reporting, and the preservation of assets. The department conducts those assessments from a fair and objective position and provides advice and recommendations for improvement. The Company is maintaining close cooperation with the auditing firm, which is our accounting auditor, by exchanging opinions on the content and results of audits on a regular and irregular basis.

＜Accounting Audits＞
Deloitte Touche Tohmatsu LLC audits the Company's accounts under an audit agreement with the Company.
The Certified Public Accountants engaged in auditing the Company's accounts are Mr. Masato Shoji, Mr. Hiroaki Aoki and Mr. Norihiro Watanabe and they all belong to Deloitte Touche Tohmatsu LLC.
All three have been involved in auditing the Company's accounts for three consecutive years.
In addition to the above, the auditing team includes 4 other certified public accountants and 12 assistant accountants.

(3)Nomination and determination of remuneration

The policies and procedures for the nomination of director candidates and the appointment and dismissal of senior management by the Board of Directors are set forth below.

[Policies and procedures to be followed when appointing candidates for Directors and Audit & Supervisory Committee Members and appointing and dismissing members of the management]

1. We appoint those who can play a role and fulfil responsibilities that should be played or fulfilled as a Director or Audit & Supervisory Committee Member in an appropriate and rigorous manner.
2. In electing Directors and Audit & Supervisory Committee Members, we appoint those with 1) a great personality, 2) wide-ranging experience and 3) a field of expertise. Especially for External Directors (including Audit & Supervisory Committee Members), we add the requirements “person who can make decisions from the standpoint of shareholders and society” in addition to the above-mentioned requirements, establish the criteria for judgement of independency and elect those who satisfy such criteria.
3. Regarding the selection of candidates for directors, the nomination and compensation committee will be deliberated and the candidates for candidates will be decided by the board of directors.
4. In electing candidates for Audit & Supervisory Committee Members, the Board of Directors determines a proposal for candidates through deliberation at the Nominating and Compensation Committee and with the consent of the Audit & Supervisory Committee.
5. Members of the management will be appointed from those who have the ability to execute business based on their strong leadership or a great personality to realize the management strategy and business strategy of the Company and the Company Group.
6. Members of the management are elected by the resolution of the Board of Directors after deliberation of the Nominating and Compensation Committee.
7. Members of the management are dismissed by the resolution of the Board of Directors after deliberation of the Nominating and Compensation Committee based on the dismissal standards below.
   1. When the member is judged to be unqualified to perform his/her roles and responsibilities
   2. When there was an illegal or fraudulent act in performing his/her duty
   3. When he/she acted to defame the Company
   4. When it is determined to be difficult to perform his/her normal duty due to health reasons and others
   5. When it is determined to be difficult to perform his/her duty as an officer due to other reasons attributable to himself/herself

＜remuneration＞
The Nominating and Compensation Committee has been established to ensure objectivity, transparency and validity of decision on Director remuneration. The Committee is an advisory organization to the Board of Directors and is composed of all the Independent External Directors.
Remuneration for Directors is determined by the Board of Directors based on the results of deliberation by the Committee as to whether or not the remuneration system and remuneration levels for Directors are in line with the policies mentioned above.