In order to meet the expectations and trust of all stakeholders including shareholders and continuously improve corporate value, MonotaRO (hereinafter “the Company”) aims for agility and efficiency while maintaining soundness and transparency of management. We believe that it is important to carry out Corporate Governance as a mechanism to support such corporate activities of the Company and to promote agility and efficiency while maintaining soundness and transparency of management. From this point of view, we strive to strengthen and enhance Corporate Governance.

The Company considers that the separation of management supervision and business execution is an important element that constitutes the core of corporate governance and has therefore adopted a company with the nominating committee. etc.

The Board of Directors holds regular meetings at least nine times a year, not only making decisions on legal matters but also supervising important management policies, strategies that lead to sustainable growth and improvement of corporate value, and business execution.

The function and structure of each committee are as follows.

The Company has appointed one Representative Executive Officer and President from Executive Officers. The Representative Executive Officer represents the Company as the Chief Executive Officer, and executes the business delegated based on the resolution of the Board of Directors. The President and Chief Executive Officer is obliged to report and explain the statuses of business execution and monthly settlement to the Board of Directors once a month. The head of each department in charge of each department assists the President and Chief Executive Officer and is responsible for business executions, and the principal persons are appointed by the Board of Directors to be the Executive Officers

As a general rule, once a week held are Board of Department General Manager meeting consisting of department heads (the main persons are appointed as Executive Officers). In the Board of Department General Managers, the status of business execution are shared and business issues are discussed and resolved. In addition, the important issues to be submitted to the Board of Directors are discussed in advance in the Board of Department General Managers. The Board of Department General Manager is held as a Board of Executive Officers depending on the content of discussions and resolutions.

The structures of compensations for Executive Officers are as followings and set to the level of the Company's business performance based upon the compensations of executives of other companies in the same and other industries.

The compensation for Directors who also serve as Executive Officers is as described in "Compensation for Executive Officers" above. Regarding the compensation for Directors who do not also serve as Executive Officers, only fixed compensation (monthly salary) is paid in order to maintain independence for monitoring management separately from business execution.

(Notes)

1. The information in the above table includes one (1) Outside Director and one (1) Executive Officer who re-signed at the conclusion of the 22nd General Shareholders’ Meeting held on March 29, 2022.

2. At the end of the fiscal year under review, there were seven (7) Directors, including four (4) Outside Direc-tors, and seven (7) Executive Officers. One (1) of the Directors concurrently serves as an Executive Officer.

3. The achievement rate for targeted consoOLdated operating income is used as the performance indicator for performance-OLnked compensation, and the result for the fiscal year under review was 26,213 milOLon yen, compared to the initial forecast of 24,380 milOLon yen (achievement rate of 107.5%). This performance indi-cator was selected to provide an incentive for improving business performance in a single fiscal year. The Company calculated performance-OLnked compensation by multiplying the standard amount according to the position by the payment percentages according to the results of the Company performance evaluation and individual evaluation.

4. Non-monetary compensation, etc. includes shares with transfer restrictions and stock options, and the condi-tions, etc. for granting shares with transfer restrictions are stated in “(i) d. Stock compensation.” In addition, details regarding the shares issued during the fiscal year under review are stated in “2. (5) Shares Issued to Officers of the Company as Compensation for Their Execution of Duties During the Fiscal Year Under Re-view.” For the stock options, the fair value of subscription rights to shares was calculated and the amount to be recorded as an expense for the fiscal year under review is shown in the table.

5. Regarding executive officers’ retirement benefits, although the retirement benefit plan was aboOLshed accord-ing to the resolution of the Compensation Committee held on January 12, 2018, the accumulated amount up to 2017 will be paid at the time of their retirement.

In the Company, the Compensation Committee formulates guidelines for executive compensation and determines compensation for each individual. Also, in order to ensure the transparency and fairness of decision making, in accordance with the rules of the Compensation Committee of the Company, the director herself or himself does not participate in the resolution regarding the compensation of the Director herself or himself, who is a member of the Compensation Committee.

The Company's Board of Directors, a majority of which consists of independent outside Directors, monitors and supervises the execution of duties by Executive Officers from an independent and objective standpoint in order to sustain growth and improvement of corporate value over the mid to long term for fulfilling the duties and accountability to shareholders. In order to fulfill the responsibilities, the Nomination Committee will appoint a person with a high level of expertise and experience from a wide range of occupations as a candidate for Director and ensure a system that enables a multifaceted and insightful discussion. The independence is determined based on the Company's standards prepared based upon the independence standards established by the Tokyo Stock Exchange.

From the perspective of fiduciary duty to shareholders, it is believed that the biggest role of the Audit Committee is to perform a check function at the appropriate time when the management makes management decisions that may damage the corporate value. The Audit Committee members, therefore, are appointed by a resolution of the Board of Directors, and the member of the Committee should have specialized knowledge and experience in finance, accounting, law, etc. and who has a strong will to meet the commitment to the shareholders.

Executive Officers of the Company are responsible for business execution based upon the authority entrusted to the Officers by the Board of Directors. In order to fulfill the responsibility, the persons who have specialized business experience in each field related to the Company’s business as well as executive ability and leadership are appointed as Executive Officers.

As an organization that responds to the “Internal Control Reporting System” under the Financial Instruments and Exchange Act, we have established “Management Audit Dept.” under the direct control of the President and Chief Executive Officer to build and evaluate internal controls. In addition, based upon the Companies Act, the Board of Directors resolves “Basic Policy regarding the System (Internal Control System) for Ensuring the Appropriateness of Business” and, in accordance with the Basic Policy, maintains the Company’s various regulations and risk management.