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 ninth evaluation was conducted in FY2023. The evaluation method and summary of the results are as follows.
[Evaluation method]
An interim review of the status of initiatives to address action plans identified in the previous effectiveness evaluation was undertaken at the meeting with Outside Directors and Audit & Supervisory Board Members, and the implementation method of effectiveness evaluation for FY2023 was also discussed, including the involvement of a third-party evaluation organization.
As a result, it was decided to appoint a major outside law firm to review the content and composition of the questionnaire, the methods of consolidation and analysis by the Board of Directors secretariat and the appropriateness of the proposed improvements. Subsequently, FY2023's implementation policy and evaluation items were deliberated at the meeting of the Board of Directors meeting held in November 2023, including the content and composition of the questionnaire prepared by the Board of Directors secretariat based on review by the third-party evaluation organization.
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 secretariat conducted consolidation and analysis of results of respondents to the survey, and received review and indications by a third-party evaluation organization on the methods of the consolidation and analysis, and the appropriation of the proposed action plans, 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 2024, and the evaluation results were confirmed at the Board of Directors meeting in February.
[Evaluation items]
The survey items for FY2023 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 the 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: The Nomination and Compensation Advisory Committee
Chapter 7: Actions on the Previously Prepared Action Plan
Chapter 8: Comments
[FY2023 initiatives based on the results of the previous year's effectiveness evaluation]
The following is the status of FY2023 initiatives that were prepared based on the results of the Board of Directors' FY2022 effectiveness evaluation.
- 1. Enhance discussions regarding strategies
- ・Regularly reported on the progress of INPEX Vision @2022 to the Board of Directors
- ・For matters that would have a particularly large impact on achieving the plan, set up individual deliberation items and held multiple discussions.
- 2. Further stimulate discussion at Board of Directors meetings
- ・Provided a fuller introduction to the issues discussed at Executive Committee meetings and earlier in the Company.
- ・In the process of reaching a resolution on new matters, clarified the background circumstances of the matters and held multiple deliberations as needed.
- ・Held lectures by outside experts and exchanges of opinions with the Board of Directors on timely topics such as the situation in the Middle East. Secured opportunities for exchange such as social gatherings for officers and organized tours of major operation sites in Japan and overseas for Outside Directors and Outside Audit & Supervisory Board Members.
- ・Continued to provide materials and briefings in advance and implemented new initiatives such as the presentation of matters for intensive deliberation for ensuring that the meeting was conducted in a smooth and effective manner even within the limited time available.
- 3. Deeper discussions regarding the desired state of the Board of Directors
- ・More in-depth discussions were held by the Nomination and Compensation Advisory Committee on further expanding the diversity of Board of Directors members and the appropriate size and composition of the Board of Directors, and the content of these discussions were provided as feedback to the Board of Directors
- 4. Ongoing reinforcement of portfolio management
- ・Discussed the concept of fund allocation and other topics based on the status of each business in the 5 net zero fields.
- ・Organized information on NPV (net present value) and risks by core area and reported to the Board of Directors on an ongoing basis.
[Summary of FY2023 evaluation results]
As a result of meetings between Outside Directors and Audit & Supervisory Board Members, as well as deliberations at the Executive Committee and Board of Directors meetings, the following evaluation results were confirmed regarding the effectiveness of the Board of Directors in FY2023.
・Regarding the composition of the Board of Directors, the knowledge and experience of its members are sufficiently diverse. Although generally there is no problem with the size of the Board of Directors and the ratio of Outside Directors under the current circumstances, going forward, discussions regarding the desired state of the Board of Directors, including ensuring further diversity, should be deepened.
・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.
・The holding of lectures by outside experts, tours of operation sites in Japan and overseas, and other measures adequately ensured that non-Executive Officers were provided with opportunities to improve their knowledge and understanding, and these efforts should be continued.
・The Nomination and Compensation Advisory Committee has played a necessary role in deliberations in the fields of both nomination and compensation, etc. Going forward, the independence of the Nomination and Compensation Advisory Committee should be further enhanced, and the efforts to strengthen cooperation with the Board of Directors should also be continued and deepened.
As a result of the summary of the individual evaluation results including the above, the Board of Directors as a whole was evaluated as being sufficiently effective overall in FY2023 as in the previous fiscal 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
- ・Set up several deliberation items for preparing the next medium-term business plan to ensure sufficient opportunity and time for discussion.
- 2. Stimulate discussion at Board of Directors meetings
- ・Further clarify the process of submitting proposals to the Board of Directors by introducing issues and points raised at the Executive Committee meetings and in preliminary discussions, and by providing thorough explanations and annotations on technical terms in materials and pre-meeting briefings, etc.
- ・Provide opportunities for appropriate interaction and exchange of opinions, including with non-members of the Board of Directors. Also, site tours will be conducted in Japan and overseas as necessary.
- ・Study and implement methods such as lectures by outside experts to further enhance the knowledge of Board of Directors members on corporate management, sustainability, trends in environmental policies and regulations in major operating countries, technology trends, and more.
- ・Further enhance the quality of deliberations on important items by continuing to conduct smooth and effective management through the presentation of matters for intensive deliberations, etc.
- 3. Enhancement of the function of the Nomination and Compensation Advisory Committee
- ・Hold deeper discussions on a succession plan for Representative Director, President & CEO at future meetings of the Nomination and Compensation Advisory Committee, and report the results of these discussions to the Board of Directors.
- ・In order to strengthen the independence of the Committee, consider the possibility of appointing an Outside Director as the Chairman of the Nomination and Compensation Advisory Committee.
- ・Further enhance reporting of the deliberations of the Nomination and Compensation Advisory Committee to the Board of Directors by the Committee Chairman and others.
- 4. Deeper discussions regarding the desired state of the Board of Directors
- ・Continue to hold more in-depth discussions at the Nomination and Compensation Advisory Committee regarding the appropriate size and composition of the Board of Directors and wider diversity of Board of Directors members (e.g., including increasing the number of female members, and participation by those with management experience in different industries and non-Japanese members).
The third-party evaluation organization has concluded that the Board of Directors secretariat has appropriately consolidated and analyzed the results of the evaluation, and that the action plans presented above, drawn from these results and analysis, have been suitably established.
Based on these evaluation results, the Company will continue striving to improve the effectiveness of the Board of Directors.