Asset Management One

Japanese

The Exercise of Voting Rights

WHAT WE DO

1.Aim of the Exercise of Voting Rights

Asset Management One Co., Ltd. (Asset Management One or “the Company”) wishes to contribute to sound economic and social development by conducting appropriate stewardship activities for the benefit of our customers and society as an asset management company and thereby support the optimum distribution of social resources.

The Company considers the exercise of voting rights as an essential aspect of its stewardship activities. In its activity, the company will strongly urge investee companies to maximize medium- to long-term return and sound corporate activities considering environment and social under appropriate governance.

2.Managing Conflicts of Interest

To achieve the goal of exercising voting rights as described above, the Company will build a structure to make appropriate decisions and manage the exercise of voting rights within group companies where the risk of conflicts of interest may exist.

Specifically, the Responsible Investment Committee established as one of the management policy committee will supervise the exercise of voting rights and other stewardship activities, and will seek to manage conflicts of interest. The Responsible Investment Committee is chaired by the head of the Investment Division, and the members of the committee include the head of the Risk Management Division. To promote responsible investment, the committee will thoroughly discuss issues of the asset management unit, which is independent of the corporate planning and the sales unit. The audit and supervisory committee members will also attend the Responsible Investment Committee meetings to check proper performance.

The Responsible Investment Committee will discuss the most important agenda items in terms of conflicts of interest and the establishment, revision, and abolition of guidelines on the exercise of voting rights. The committee will also discuss and report on overall stewardship activities, including the evaluation and review of the fulfillment of stewardship responsibility and dialogue (engagement) with investee companies.

As for the most important items in the agenda in terms of conflicts of interest within group companies, the Company will commission a proxy adviser, an independent third party, to provide advice on whether to vote for or against them under the guidelines on the exercise of voting rights, and the Responsible Investment Committee will deliberate after consulting the Proxy Voting Advisory Council, where independent outside directors take a majority. The results of the exercise of voting rights will be monitored by reporting to the Board of Directors and the Audit and Supervisory Committee.

Under the Responsible Investment Committee, a sub-committee on the exercise of voting rights is established to exercise voting rights appropriately on individual agenda items (except for the most important agenda items in terms of conflicts of interest, which will be discussed by the Responsible Investment Committee). The sub-committee’s exercise of voting rights will be reported to the Responsible Investment Committee.

3.Policy on Exercise of Voting Rights

(1)Basic policy

To achieve the goal of exercising voting rights as described above, and to encourage investee companies to develop proper corporate governance, the Company has established the standards for exercising voting rights.
The Company will review the standards as appropriate, in response to economic and social changes, and ensure that they continue to benefit shareholders in the medium to long term.

(2)Relationship between the exercise of voting rights and engagement

The Company believes it is important to make decisions on whether to vote for or against agenda items based not only on formal criteria for judgment, but also on constructive dialogue (engagement) with investee companies. If the Company makes decisions on agenda items based on dialogue (engagement), the Responsible Investment Committee or the sub-committee will discuss them as important agenda items, and will make appropriate decisions on the exercise of voting rights.
In regards to corporate governance issues for which is difficult to set general standards for the exercise of voting rights, the Company aims to find a solution based on constructive dialogue (engagement) with investee companies.

(3)Process for exercising voting rights

The Company will make fair decisions on agenda items under the standards for the exercise of voting rights established by agenda item. If the Company exercises voting rights at companies which have issues with corporate governance (such as law violations, misconduct, low efficiency of shareholders’ equity, etc.), it will make measured judgments to maximize shareholder return in the medium to long term. In these cases, the Company apply stock screening in advance and the Responsible Investment Committee or the sub-committee discusses the agenda item appropriately as an important item. In addition, the Company will hold dialogue (engage) with the Company as needed to make an appropriate decision on the item.

4.Standards for Exercise of Voting Rights

(1)Proposals by the Company

The Company makes decisions on agenda items considering the following perspectives:

A) Appropriation of retained earnings
 a) Share price performance and dividend payout ratio, financial strength, etc.

B) Appointment of directors
 a) Business performance (ROE and the current profits, etc.)
 b) Presence or absence of involvement in law violations and or misconduct
 c) The independence of the candidates for outside directors
 d) The reasonable grounds for increasing the number of directors
 e) Number of outside directors
 f) Participation ratio of outside directors to Board of Directors’ Meetings

C) Appointment of auditors
 a) Presence or absence of involvement in law violations and or misconduct
 b) The independence of the candidates for outside auditors
 c) The reasonable grounds for decreasing the number of auditors
 d) Participation ratio of outside auditors to Board of Directors’ Meetings and Board of auditors’ Meetings

D) The partial amendment of the Articles of Incorporation
 a) The reasonable grounds for increasing the shareholders return

E) Payment of retirement benefits
 a) The payment of retirement benefits for outside directors or auditors

F) Revision of directors’ compensation
 a) The reasonable grounds for increasing the amount of directors’ compensation given the Company’s weak share
price and business performance

G) Stock acquisition rights
 a) Stock options granted to outside directors or auditors
 b) The potential for share value dilution, and the adequacy of the exercise price

H) Appointment of an accounting auditor
 a) Presence or absence of involvement in law violations and or misconduct

I) Mergers and exchange of shares
 a) Adequacy of the ratio of shares for the merger or share swap

J) Takeover defense measures
 a) The possibility of an arbitrary launch by the Board of Directors
 b) The reasonable grounds for long-term business performance

K) Allocation of new shares to a third party
 a) The adequacy of the issue amount and the price

(2)Proposals by shareholders

As is the case with proposals by the Company, the Company makes decisions individually from the standpoint of whether they will contribute to shareholders’ profit.

The Company may deal with the exercise of voting rights associated with foreign equities in a limited way in light of each country’s specific laws and time constraints, etc. The Company will take same appropriate measures listed above for the exercise of voting rights associated with REIT.

5.Results of Exercise of Voting Rights of Shareholder's Meetings

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