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Messages from Outside Directors and an Outside Audit & Supervisory Board Member

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Aiming to Contribute to the Realization of K25 and the Enhancement of Corporate Value through Open, Constructive Dialogue

Outside Director

Nobuhide Hayashi

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I believe that the ultimate purpose of the Board of Directors is to enhance corporate value over the mid- to long-term, and to effectively realize the putting in place of a governance framework appropriate to the company's actual circumstances. FY2020 was the year in which Kao formulated its new mid-term management plan, the Kao Group Mid-term Plan 2025 (K25). This process began with discussion regarding the overall vision for K25. The Board of Directors engaged in repeated, in-depth discussion, and in addition, intensive, whole-day discussions were held involving all Outside Directors. In this way, the formulation of K25 was undertaken after extensive consensus-building between management and Outside Directors. I believe that undertaking the process in this way made it possible to achieve more in-depth discussion of Kao's vision, business model and human capital development strategy. Implementation of K25 began in January 2021. Going forward, we will need to carry out a thorough PDCA (plan, do, check, act) cycle on an annual basis in accordance with the K25 roadmap, while ensuring that K25 is strategically disseminated both within and outside the company. I also believe that we will need to specify the types of human capital that will be required in order to implement K25 effectively, and engage in discussion regarding talent cultivation plans and the effective utilization of external talent, including recruitment of non-Japanese employees. It is also very important to check whether the outcomes of discussion by the Board of Directors are able to take root firmly within the organization as a whole, and to ensure that, when problems emerge, possible solutions to these problems are discussed by the board. I feel that, overall, Kao's Board of Directors is very well structured, and I hope that the board will be able to continue making a positive contribution toward the achievement of K25 and the enhancement of corporate value through open, constructive discussion that does not discriminate between Inside and Outside Directors.

Contributing toward Enhancing Governance throughout the Kao Group as a Whole

Outside Audit & Supervisory Board Member

Nobuhiro Oka

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Since taking up the position of Outside Audit & Supervisory Board Member in March 2018, I have attended every meeting of the Board of Directors and of the Audit & Supervisory Board. Kao's Board of Directors operates with a high level of efficiency, with open, wide-ranging discussion based on the spirit of the Kao Way that does not distinguish between Outside and Inside Directors, or on the basis of the position held. With regard to internal controls, Kao is currently engaged in the building of a framework to further enhance the effectiveness of its internal controls and adjust how they operate. I hope to engage in further discussions on this matter at the meetings of the Board of Directors, which is charged with the role of management oversight. Regarding risk management and crisis management, it is important not only to make the maximum possible effort to prevent incidents from occurring, but also to ensure that, if an incident does occur, the negative impact is minimized. In my role as an Outside Audit & Supervisory Board Member, I am focused on realizing the timely transmission of information and on ensuring appropriate initial response, etc.
I also serve as a Member of the Audit & Supervisory Board of Kao Group Customer Marketing Co., Ltd., a subsidiary of Kao Corporation, and I aim to make a contribution from the perspective of enhancing group governance in the Kao Group as a whole. The Kao Group holds Affiliated Company Audit & Supervisory Board Member Coordination Meetings which are attended by auditors from Kao affiliates within Japan, with the Audit & Supervisory Board Members of Kao Corporation playing a central role. I do my utmost to take advantage of opportunities such as this to spread awareness of the proper approach for Audit & Supervisory Board Members to take, and to invigorate their activities. The effectiveness of the Audit & Supervisory Board is evaluated on an annual basis. As a result, a number of new initiatives were implemented in FY2020, including the establishment of a Compensation Advisory Committee for Audit & Supervisory Board Members Initiatives such as this will provide a foundation for raising the overall level of corporate governance at Kao and for supporting further enhancement of corporate value.

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