II.Organizational Structures Related to Managerial Decision-making, Implementation and Supervision, and Additional Corporate Governance Systems

Organization	Board of Corporate Auditors

Number of Board Members under the Articles of Incorporation	15
Term for Board Members under the Articles of Incorporation	1 year
Chairperson of Board of Directors	President and CEO
Number of Board Members	14
Number of Outside Directors	None

Board of Corporate Auditors	Formed
Number of Corporate Auditors under the Articles of Incorporation	5
Number of Corporate Auditors	4

Collaboration between Corporate Auditors, Accounting Auditors, and Internal Audit Division

Our corporate auditors and accounting auditors hold meetings periodically or whenever necessary.
Additionally, our corporate auditors meet with the staff members of the Internal Audit Division. In cooperation with the Division, auditors review accountant reports, conduct internal inspections (twice a year) and observe checkups on the Division.

Outside Corporate Auditors	Selected
Number of Outside Corporate Auditors	3
Number of Outside Corporate Auditors who are Independent Directors	3

Relationship with our Company (1)

Name	Former Status	Relationship with company (*1)
		a	b	c	d	e	f	g	h	i
Zenjiro Watanabe	From other company								○
Masami Yamashita	From other company								○
Yuzuru Fujita	From other company				○				○

(*1)

1. From the parent company
2. From other affiliated companies
3. Major shareholder of the Company
4. Concurrently serves as an outside director or as an outside auditor of another company
5. Concurrently serves as an executive director or as an operating officer of another company
6. A spouse or a relative within the third degree of consanguinity, or person in an equivalent relationship, of an executive officer or an operating officer serving in the Company or a business entity having a particular relationship with the Company
7. Receives compensation as director or proprietary benefit from parent company or parent company's subsidiary
8. Has entered into a limitation of liability agreement with the Company
9. Other

Relationship with our Company (2)

Name	Independent corporate auditor	Additional Information	Reasons for appointment as an outside corporate auditor (including reasons for designation as an independent corporate auditor, if applicable)
Zenjiro Watanabe	○	Worked at Japan Tobacco Inc.	A person of integrity and insight with sufficient experience as a company director to monitor the management of all aspects of corporate affairs. Moreover, although the Company does have dealings with his former employer, Japan Tobacco Inc., because it was deemed that Zenjiro Watanabe would not wield any undue influence over decisions involving those dealings, he is considered to be sufficiently independent to serve as an independent corporate auditor.
Masami Yamashita	○	Worked at Mizuho Bank, Ltd.	A person of integrity and insight with sufficient experience as a company director to monitor the management of all aspects of corporate affairs. Moreover, although the Company has major dealings with his former employer, Mizuho Bank, Ltd., because the Company also has dealings with several other financial institutions and because the amount of outstanding loans to Mizuho Bank, Ltd., comprise less than 10% of all loans, the degree of influence Masami Yamashita may wield over such matters has been deemed insignificant. Also taken into consideration were the 8 years that have passed since his retirement. Mr. Yamashita is therefore considered to be sufficiently independent to serve as an independent corporate auditor.
Yuzuru Fujita	○	Principal Adviser to Asahi Mutual Life Insurance Co.	A person of integrity and insight with sufficient experience as a company director to monitor the management of all aspects of corporate affairs. Although Asahi Mutual Life Insurance Co., where Yuzuru Fujita serves as Principal Adviser, is a shareholder of Nippon Express, Asahi Mutual Life Insurance Co. is not a major shareholder. Mr. Fujita is not directly involved in managing its affairs, and therefore he is considered to be sufficiently independent to serve as an independent corporate auditor.

Number of Independent Corporate Auditors	3

Other Matters Regarding Independent Corporate Auditors

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Incentives for Board Members Incentive Plans Provided to Directors	None

Additional Information

We have introduced stock options as part of director remuneration.

Recipients of Stock Options

Additional Information

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Disclosure of Individual Compensation for Directors	Not disclosed

Additional Information

• 105th term (April 1, 2010 - March 31, 2011)
• Compensation for Directors and Auditors
• Directors: 612 million yen for 15 directors
• Auditors: 93 million yen for 5 auditors (including 63 million yen for 3 outside auditors)

Existence of Policies for Determining the Amount or Method of Calculating Compensation for Directors and Corporate Auditors	Yes

Disclosure of Policies for Determining Compensation and Methods of Calculation

The Company determines compensation for directors at Meetings of the Board of Directors and for Auditors at the Auditor Conference based on duties and performance, according to guidelines set forth on director compensation.
Specific amounts will be within those limits as resolved by the 100th Annual Shareholder Meeting on June 29, 2006 (director compensation to be no more than 55,000,000 yen per month (not including salary paid for another position held) and auditor compensation to be no more than 10,000,000 yen per month), while taking into consideration company performance, industry standards, and employee salary levels.

The Audit Division, in charge of internal auditing, provides the necessary job-related communication information that the occasion demands in order to support the duties of corporate auditors, including outside auditors.

• To guarantee transparency and legality through deliberation, decisions concerning company operations will be made at Meetings of the Board of Directors at which 4 auditors, including 3 outside corporate auditors, are present, or alternatively, if attended by 3 auditors, including 2 outside auditors, at (1) management meetings, (2) executive meetings, or (3) department head meetings attended by the chief managing officer and general manager.
• Duties will be carried out by the officers selected by the Board of Directors to perform the duties in accordance with Board of Directors resolutions, and the Board of Directors will oversee the performance of the duties.
  
• For internal auditing, the Auditing Division was set up in the Head Office, audit managers assigned to individual business divisions and branches, visiting audits, paper audits, and other internal audits conducted in accordance with the audit plan, and reports made to the Corporate Auditor on a timely basis.
• Corporate Auditor audits are conducted through inspection audits of major business locations and examinations of subsidiary companies in collaboration with the Auditing Division and business division/branch audit managers.
• Ernst & Young ShinNihon LLC has been selected as an accounting auditor. This audit corporation conducts audits as an independent third party, and it audits the Company and its consolidated subsidiaries in accordance with the yearly accounting audit plan and in collaboration with the Company's internal auditing departments and the Board of Auditors.

Objectivity in auditing is maintained by conducting internal audits, Corporate Auditor audits and accounting audits in an independent and complementary fashion.

The names of the certified public accountants performing the audit operations at the aforementioned audit corporation in FY2010, and the numbers of persons assisting in these audit operations are given below:

• Representatives and Partners: Nobuyuki Ono, Akira Gokita, Tokuro Onohara

• Comments have been omitted as the above persons have each conducted these audits for less than seven consecutive years.
• The audit corporation has taken measures on its own initiative to ensure that the representatives and partners above are not involved in accounting auditing of the Company beyond a predetermined period of time.

• Numbers of persons assisting in auditing operations: 12 certified public accountants, 31 other persons

We are convinced that the current structure provides a managerial watchdog function and ensures objectivity and neutrality through audits conducted by auditors, including 3 outside corporate auditors.

• Frequently Asked Questions about IR (FAQ)

Related Information

• I.Basic Policy on Corporate Governance and Basic Information on Capital Structure, Corporate Attributes and Other Matters
• III.Implementation of Measures Regarding Shareholders and Other Stakeholders
• IV.Internal Control Systems
• V.Other