日本マクドナルドホールディングス（2702） – Corporate Governance Report

Corporate Governance Report Last Update: March 31, 2022 McDonald’s Holdings Company (Japan), Ltd CEO and President, Representative Director, Tamotsu Hiiro Contact: Keiji Nakazawa, Vice President, IR Officer TEL: 03-6911-6000 TSE Securities Code：2702 Please find below the company’s corporate governance update. I. Basic views on corporate governance, capital structure, corporate profile and other basic information 1. Basic views [Updated] [Updated] We strive to maximize the profit of all stakeholders including shareholders, customers, employees, franchisees and suppliers. Also, we recognize the importance of enhancing the transparency and efficiency of our business and increase the sustainable growth and corporate value of the Group. To that end, the management decision-making and supervisory functions are separated from the business execution function. This is done to establish a timely and efficient management and execution system and engage in realizing a transparent business model at high level with the participation of Outside Directors. Reasons for non-compliance with certain principles of Japan’s Corporate Governance Code As the company listed on the TSE, we implement all of the principles of the Corporate Governance Code. Disclosure based on each principle of Corporate Governance Code 【Principle 1.4 Cross-Shareholdings】 The Company doesn’t hold shares of other listed companies as cross-shareholdings. 【Principle 1.7 Related Party Transactions】 The appropriateness of transactions is confirmed through the following procedures. In general, transaction contracts are subject to review by the Legal Division, and in addition, transactions with directors are subject to the Board approval in accordance with laws/regulations and the regulations for the Board of Directors, and transactions with major shareholders, etc., except for minor transactions, are subject to the Board approval in accordance with the regulations for the Board of Directors. 【Principle 2.4 Ensuring Diversity, Including Active Participation of Women】 ➢ “People Business”･･･ It is the people themselves that supports the growth of a company. Because we believe in this, at McDonald’s we value a way of work that enables people growth and play an active part in the business. To realize this, McDonald’s is committed to provide an opportunity for growth, enhance talents, and recognize contributions…a “People Promise” that McDonald’s made with all staff. We aim to create a workplace where a diverse team of people across gender, age, personality, and background can fully realize their strengths and contribute to business growth as a team. To realize these values, we have been implementing a variety of diversity and inclusion initiatives such as promoting career development of women. We will continue to listen to our people through a cross-company “Open Door! Team” project*1 and other means to promote (1) active involvement of diverse individuals, (2) diverse ways of working, and (3) career development of individual staff, realize diversity & inclusion that are unique to McDonald’s, and aim for the further growth and development of our business. *1 “Open Door! Team”: a D&I promotion project team consisting of volunteers from within the company. 1 / 30 【Supplementary Principle 2.4.1 Ensuring diversity in the promotion to core human resources】 (1) Ensuring diversity ➢ Our customers’ needs are diverse and continue to change at a rapid pace. In order for us to continue to meet the needs of our customers in this time and age, we believe that our organization needs to have diverse teams and value a culture that actively accepts diversity. We are working towards the realization of a diverse workplace across gender, age, personality, and background. ➢ We have continued to promote women’s advancement, and in 2008 we launched JWLN (Japan Women’s Leadership Network) to collaborate with the global community and build an in-house network, the proportion of women in various positions as well as management position is increasing, offering a greater opportunity to play an active role in the business. Also, “Open Door! Team”, a project run by volunteers to promote career development of women has been in action from 2019 to listen to the voices of female staff with the aim of creating and fostering a work-friendly environment, people growth, and career development. Currently, 25.4% of management positions are held by women (as of July 2021), and we are taking actions to reach 40% by 2030. (For Reference) banking-corpo/ ■ Recipient of the 2017 Catalyst Special Award https://www.catalyst.org/media-release/catalyst-japan-honors-womens-advancement-initiatives-at-deutsche-bank-group-japan-lixil-group-corporation-mcdonalds-company-japan-ltd-seiyu-gk-and-sumitomo-mitsui-■ General business owner action plan based on the Women’s Achievement Promotion Act (2021 – 2022) https://positive-ryouritsu.mhlw.go.jp/positivedb/planfile/202107091313303161654_1.pdf ■ Diversity and inclusion on the company’s official website https://www.mcdonalds.co.jp/scale_for_good/our_people/diversity_and_inclusion/ ➢ We are continuing with new graduates and midcareer hires regardless of their nationality. Recently, we have been hiring 5 to 10 international graduates every year. Currently there are around 40 foreign nationals and about 10 of them are playing an active role at the head office as managers. McDonald’s is a global company, and as such we want to continue to further expand the opportunity to play an active role in our business, for example by filling many more positions with talented individuals from any nationality. ➢ Talented midcareer hires are working at our restaurants and offices. In recent years, midcareer hires accounts for about 60% (65.5% in 2020) of total annual hires. Also, 62% of management positions are filled by midcareer hires and they are actively driving our business. The company is planning to continue with its plan to hire people with experience and knowledge in specialized fields to fill the needs of divisions and positions. status (2) Guidelines for people development and internal work environment setup to secure diversity including their ➢ We are taking actions to create a work place where people from diverse backgrounds can play an active role and develop an organization to promote respect for individuality, prevent isolation, offer support and accept each other. 2 / 30 ■ Local salaried employee system In September 2021, we introduced a system of limiting workplace, working hours, and position for restaurant employees so that they can work at McDonald’s according to their lifestyle with peace of mind. ■ Flextime program (for staff and selected restaurant employees) ■ Short working hour program・ Variable working hour program (restaurant employees) ・Open recruitment for part time staff ・ Evaluation program 【Principle 2.6 Roles of Corporate Pension Funds as Asset Owners】 The Company has adopted a defined contribution pension plan. （ⅰ）Business Principles, Business Strategies and Business Plans etc. 【Principle 3.1 Full Disclosure】 ＜Business Principles＞ At McDonald’s, our purpose is to feed and foster our communities by bringing delicious food and smiles to not only our customers, but also our employees and communities. Founded on QSC&V, McDonald’s values are shared and embodied by all employees with the goal of “making delicious feel-good moments easy for everyone.” ＜Business Policies＞ Our group’s basic policy is to ensure food safety and security and to provide customers with the best possible store experience, including convenience, the highest quality, service, cleanliness and value. In addition, our group will build good relationships with all stakeholders, including shareholders, customers, local communities, employees, franchisees, suppliers, etc., and ensure the soundness and transparency of management, and will work to achieve sustainable growth and enhance the corporate value of our group as an important management issue. In addition to complying with laws and regulations, in order to fulfill our responsibilities with respect to various “Environmental, Social and Governance (ESG)” issues, we will continue to focus on our store operations, procurement of food and materials, reduction of environmental impact, and contribution to local communities, and will leverage our strengths and scale to achieve the Sustainable Development Goals (SDGs) set as global agenda by the United Nations. Our group aims to increase corporate value through continuous growth and improved profitability, and uses ＜Business Strategies＞ (1) Targeted Key Management Indicators the following items as key performance indicators. Growth: Net sales growth rate Profitability ：Operating income growth rate, operating margin Investment efficiency: ROE (2) Medium- to Long-Term Corporate Management Strategy Through 2021, our business has grown steadily, with systemwide sales, net sales, operating income, and ordinary income at all restaurants increasing for six consecutive years. From 2022, we will strengthen our business foundation and make investments in the future to achieve steady growth and meet the diverse and growing expectations of our customers. 3 / 30 ＜Financial strategy, allocation of management resources＞ Our group aims to secure adequate funds for business activities, maintain liquidity, and achieve a sound financial position by generating stable operating cash flow. Our group’s policy is to allocate working capital and capital investment funds mainly from its own funds generated through business activities, and to procure funds through borrowings and other means as necessary. As for management resources, we will allocate them to investments to achieve sustainable growth and improved profitability over the medium to long term. In addition, in terms of dividend policy, we will strive to return profits to our shareholders by comprehensively taking into account our business performance, dividend payout ratio and cash flow, while maintaining financial indicators such as equity ratio and return on equity at a reasonable level. Our basic policy is to distribute surplus once a year as a year-end dividend, and the decision-making body for the distribution of this surplus is the General Meeting of Shareholders. ＜Medium-term company business plan＞ The Company has announced a medium-term management plan for the fiscal year from 2022 to 2024 in the announcement of 2021 Full Year Earnings Release (https://ircms.irstreet.com/contents/data_file.php?template=2095&brand=74&data=331328&filename=pdf_file1.pdf). （ⅱ） Basic Views and Guidelines on Corporate Governance We strive to maximize the profit of all stakeholders including shareholders, customers, employees, franchisees and suppliers. Also, we recognize the importance of enhancing the transparency and efficiency of our business and increase the sustainable growth and corporate value of the Group. To that end, the management decision-making and supervisory functions are separated from the business execution function. This is done to establish a timely and efficient management and execution system and engage in realizing a transparent business model at high level with the participation of Outside Directors. （ⅲ）Board Policies and Procedures: Remuneration of Senior Management and Directors In order to ensure transparency and objectivity in the Company’s decision-making regarding remuneration for directors, the Company has voluntarily established the Compensation Committee, which is chaired by an independent outside director. The Compensation Committee determines compensation in accordance with the policy established by the Board of Directors. The policy in determining the remuneration of Directors is as follows. １． Basic policy as follows. Compensation for board members of the company shall be linked to the company’s business performance so as to function sufficiently as an incentive for sustainable enhancement of corporate value. The basic policy is ・To determine compensation of individual members at a level that is appropriate in light of their respective responsibilities and competitive in comparison with other companies in the same industry and companies of the same size in other industries. ・While developing excellent talents within the company, compensation level is set at competitive and effective level which enables to attract diverse outstanding talents as board members from in and out of the country. Specifically, compensation for executive directors shall consist of basic compensation and retirement allowance as fixed compensation and performance-based compensation including stock price linked compensation, etc. Outside board members who are responsible for supervisory functions shall be paid basic 4 / 30 compensation and retirement allowance in consideration of their duties. ２． Policy to determine the compensation amount, etc. for each individual as basic compensation (including policies to determine the timing or conditions for offering compensation, etc.) Basic compensation (monetary) for board members of the company shall be fixed monthly compensation which shall be determined in accordance with their roles, responsibilities, years of service and other factors, taking into consideration the level of other companies, business performance of the company, the level of employee salaries and evaluations in a comprehensive manner. The basic compensation shall be paid at a fixed time every month, and no special conditions shall be set for payment. The standard for retirement allowance is regulated by retirement allowance regulations based on compensation, period, title, and contributions as a board member. It will be determined and paid at the time of retirement based on the regulations. ３． Policy to determine details of performance-based compensation, etc. and the method for calculating the amount (including policies to determine the timing or conditions for offering compensation, etc.) Performance-based compensation, etc. consists of (i) compensation reflecting performance indicators (KPI) to raise awareness towards the improvement of business performance for each fiscal year and (ii) compensation using a pseudo-share format of the company’s shares to raise awareness towards the improvement of corporate value over the medium-to-long term. (i) The amount calculated in accordance with the degree of achievement against the target value and evaluations shall be paid at a certain time every year. Target performance indicators and their values shall be set so that they are consistent with the targets for the relevant fiscal year. (ii) The number of pseudo-shares determined in accordance with the roles, responsibilities and evaluations shall be granted at a certain time each year. When exercising the right, the amount calculated in accordance with the company’s stock price shall be paid as monetary compensation at the time rights are exercised. ４． Policy to determine the ratio of the amount of monetary compensation, the amount of performance-based compensation, etc. or the amount of non-monetary compensation, etc., to the amount of compensation, etc., of individual board members The ratio of compensation for each type of executive director shall be determined within the range of the following percentage table based on the level of compensation benchmarked against companies of a similar business scale or in a related industry or business category, and shall be composed by comprehensively taking into account the role and responsibilities of each individual by the Compensation Committee. Table of percentages for each role (When each individual’s basic compensation is set at 100) Basic compensation Performance-based compensation (1) Single year Performance-based compensation (2) Medium- to long-term 40-80 30-70 0 20-100 15-100 0 * The ratio of performance-based compensation (① and ②) is when the target is 100% achieved (the * Even within the same job title, the percentage of compensation by type will be determined for each Representative Director Inside Director Outside Director 100 100 100 standard amount is applied). individual. 5 / 30 * When the Compensation Committee decides that there is a reasonable grounds, performance based compensation can be granted exceeding the above. * Percentage will not be set for the amount of retirement allowance. ５． Matters relating to the determining of details of individual compensation, etc. of board members The amount of compensation for each individual (including retirement allowance) shall be determined by the Compensation Committee in accordance with the above policy based on the delegation from the Board of （ｉｖ）Board policies and procedures in the appointment/dismissal of the senior management and the nomination of directors and kansayaku candidates; A proposal for appointment/dismissal of the senior management and nomination of directors and kansayaku candidates shall be created by representative directors, based on the required qualifications for directors and kansayaku and the policy on the composition of the Board of Directors as set forth in this report. After deliberation of the proposal by the Nomination Committee and after obtaining consent of the Kansayaku Board specially for nomination of Kansayaku candidates, the proposal shall be resolved by the Board of Directors. Directors. Sarah L. Casanova （ｖ）The reasons for the appointment of individual candidates for Directors and Kansayaku are as follows. Ms. Sarah L. Casanova has served as the head of marketing and managing director of several McDonald’s companies overseas for many years, and has led the Company group as the representative director, president and chief executive officer of the Company (since 2014) and its subsidiary (since 2013), and as the representative director and chairman of the Company (since 2021) and its subsidiary (since 2019). She has a wealth of experience and extensive insight into the McDonald’s business and management. Based on her past achievements in her duties and her abundant insight, the Company judged that she can continue to contribute to the enhancement of the corporate value of the Company and elected her as a director. Tamotsu Hiiro Mr. Tamotsu Hiiro has served as the president and representative director of Johnson & Johnson K.K. and other positions, and has led the Company group as a director of the Company and the representative director, president and chief executive officer of the subsidiary of the Company since 2019 and as the representative director, president and chief executive officer of the Company and its subsidiary since 2021, and he has a wealth of experience as a director of the Company and extensive insight into McDonald’s business and management. Based on his past performance in his duties and his abundant insight, we believe that he can continue to contribute to the enhancement of the corporate value of the Company and have elected him as a director. Atsuo Shimodaira Mr. Atsuo Shimodaira has been engaged in sales-related business at the Company and its subsidiary for many years, and has been engaged in his duties as the representative director, executive vice president and chief operating officer of the Company and its subsidiary since 2015. He has a wealth of experience as the chief operating officer of the Company’s business and a wealth of insight into the McDonald’s business and the Company’s operations. Based on his past performance in his duties and his abundant insight, we believe that he can continue to contribute to the enhancement of the corporate value of the Company and have elected him as a director. 6 / 30 Robert D. Larson Mr. Robert D. Larson has served as a managing director and president of several McDonald’s companies overseas for many years, and served as the chairman of the Board of Directors of the Company from 2015 to 2021 and has served as a director since then. He has a wealth of experience in strengthening the Company’s management and the functions of the Board of Directors, as well as extensive insight into the McDonald’s business. Based on his past performance in his duties and abundant insight, the Company judged that he can continue to contribute to the enhancement of the corporate value of the Company and elected him as a Mr. Arosha Wijemuni has served as senior finance director and vice president of franchising of several McDonald’s companies overseas for many years, and has served as a director of the Company since 2016. He has a wealth of experience in advising on franchise businesses and a wealth of insight into the McDonald’s business. Based on his past performance in his duties and his extensive insight, we believe that he can continue to contribute to the enhancement of the corporate value of the Company and have therefore elected director. Arosha Wijemuni him as a director. Jo Sempels Mr. Jo Sempels has served as a head of finance and human resources and a managing director of several McDonald’s companies overseas for many years and has a wealth of experience and achievements as an executive, as well as extensive insight into finance, human resources and McDonald’s business. Based on his past performance in his duties and his abundant insight, we have judged that he can contribute to the enhancement of the corporate value of the Company and have therefore elected him as an outside director. Akira Kawamura As a lawyer, Mr. Akira Kawamura has served as a partner of a law firm, the president of the International Bar Association (IBA), and the president of the Japan Association of Arbitrators, and has a wealth of experience and achievements as a lawyer in Japan and overseas, as well as a wealth of insight in corporate legal affairs, compliance, international legal affairs, and arbitration. Based on this wealth of experience and insight, he has given valuable advice and opinions on the Company’s management from an independent and objective perspective as an outside director of the Company since 2002. Based on this and other factors, the Company judged him to be suitable for continuing to strengthen the effectiveness of the supervisory function of the Board of Directors of the Company and appointed him as an independent outside director. Masataka Ueda Mr. Masataka Ueda has served as a representative director, etc. of several companies and has abundant experience and achievements as a manager, as well as extensive insight into finance, marketing, human resources, etc. Based on this wealth of experience and insight, he has given valuable advice and opinions on the Company’s management from an independent and objective perspective as an outside director of the Company since 2016. Based on this and other factors, the Company judged that he is qualified to continue to strengthen the effectiveness of the supervisory function of the Board of Directors of the Company and appointed him as an independent outside director. Tetsu Takahashi Mr. Tetsu Takahashi, as a lawyer, has served as a partner of a law firm and as an outside director and outside audit & supervisory board member of several companies, and has a wealth of experience and achievements 7 / 30 as a lawyer and as an outside director, as well as extensive insight into legal, compliance and corporate governance etc. Based on his wealth of experience and insight, he has been making useful comments from an independent and objective perspective as an outside director of the Company’s subsidiary since 2007. Based on this and other factors, the Company judged that it would be appropriate to appoint him as an outside director of the Company in order to further strengthen the effectiveness of the supervisory function of the Board of Directors of the Company and appointed him as an independent outside director. Mr. Takaaki Ishii has been engaged in finance-related business at the Company and its subsidiaries for many years, and has been engaged in business as a full-time kansayaku of the Company and its subsidiary since 2012, and has a wealth of experience in auditing and a wealth of insight into the McDonald’s business, finance, accounting and auditing. Based on his past performance in his duties and his extensive insight, we believe that he is well qualified to continue to strengthen the supervisory and auditing functions of kansayaku of the Company and have therefore appointed him as kansayaku. Takaaki Ishii Ellen Caya Ms. Ellen Caya has taken charge of internal audit for years in other companies and McDonald’s Corporation, an American corporation which grants, as licensor, to McDonald’s Company (Japan), Ltd., a right to operate McDonald’s business, and has thorough knowledge and experiences in auditing, corporate governance and accounting. Based on this wealth of experience and insight, she has given valuable advice and opinions from an objective standpoint as an outside kansayaku of the Company since 2020. Based on this and other factors, the Company judged that she is qualified to continue to strengthen the supervisory and auditing functions of the Kansayaku Board of the Company and appointed her as an outside kansayaku. Yuko Tashiro Yuko Tashiro is a U.S. certified public accountant who has served as a partner of an auditing firm, a financial officer of several companies, and a representative director, etc. She has abundant experience and achievements as an accountant and manager, as well as professional knowledge of corporate accounting and extensive insight into corporate management. Based on this wealth of experience and insight, she has given valuable advice and opinions from an independent and objective standpoint as an outside kansayaku of the Company since 2016. Based on this and other factors, the Company judged that she is qualified to continue to strengthen the supervisory and auditing functions of the Kansayaku Board of the Company and appointed her as an independent outside kansayaku. Yoshiyuki Honda Mr. Yoshiyuki Honda is a certified public accountant and a U.S. certified public accountant who has been engaged in auditing business, and has also served as CFO and representative director and representative executive officer of several companies, and has abundant experience and achievements as CFO and manager, as well as expert knowledge on corporate accounting and finance, and extensive insight on corporate management. Based on this experience and insight, he has given valuable advice and opinions from an independent and objective standpoint as an outside kansayaku of the Company since 2016. Based on this and other factors, the Company judged that he is suitable for continuing to strengthen the supervisory and auditing functions, etc. of Kansayaku Board of the Company and appointed him as an independent outside kansayaku. 8 / 30 【Supplementary Principle 3.1.3 Sustainability Initiatives】 Our group’s sustainability initiatives and investments in human capital, etc. are disclosed on the following website. https://www.mcdonalds.co.jp/company/csr/ 【Supplementary Principle 4.1.1 Scope of delegation to management】 In accordance with regulation of the Board of Directors and internal rules, the Board of Directors shall resolve matters regarding Shareholders Meeting and Board of Directors, business plans, commencement of important new business and expansion or downsizing of business, other than those stipulated by laws and other important business operations, and delegates other matters to the President and Representative Director and other members of the management team. 【Principle 4.8 Effective Use of Independent Directors】 Three directors, or one-third of the Company’s nine directors, are independent outside directors. years: personnel*2 thereof. business personnel thereof. 【Principle 4.9 Independence Standards and Qualifications for Independent Directors】 The Company shall determine that the Company’s Outside Directors and Outside Kansayaku possess sufficient independence from the company when all of the following requirements are satisfied: 1. Individuals who have not satisfied either of the following conditions (A) through (G) for the past three fiscal (A) An entity for which the Company or its subsidiary (the “Company Group”) is a major client*1 or business (B) A major client of the Company Group*3 or business personnel thereof. (C) A major shareholder (directly or indirectly holding a voting interest of 10% or more) of the Company or (D) A consultant, accounting expert or legal expert who has received compensation in the form of a large amount of money or other assets*4, other than officer’s compensation from the Company Group (or an individual belonging to an entity such as a corporation, association, or other group that has received such assets). (E) An independent auditor of the Company Group (or an individual belonging to a corporation, association or other group that serves as an independent auditor of the Company Group). (F) Business personnel of the other company in cases where the business personnel of the Company Group have been appointed as outside officers of other companies. (G) An entity which has received a large amount of money or other assets as donation from the Company Group or business personnel thereof. 2.The individual is not a relative*5 of a person who meets either of the following conditions “a.” or “b.” a. An individual who satisfies any of the foregoing conditions (A) through (E) in Section 1 above for one of the past three fiscal years. However, the business personnel stipulated in conditions (A) through (C) shall refer only to key business personnel*6. Condition (D) or (E) shall apply only to persons with specialized qualifications, such as certified public accountants and lawyers. b. Key business personnel of the Company Group in the current fiscal year or any of the past 3 fiscal years. (In the case of outside auditors, key business personnel include non-executive directors) 9 / 30 is shared. as division managers. Committee】 Notes.: 1. An entity for whom the Company Group is a major client refers to a supplier the trading amount with the Company Group of which exceeds the higher of ¥100 million or 2% of the consolidated net sales of the supplier group, in the most recent fiscal year. 2. Business personnel refers to the executive directors, executive officers, other officers who execute the operations of corporations, etc., ordinary employees and others who conduct business operation. 3. A major client of the Company Group refers to an entity that satisfies any of the following conditions: (1) A client the Company Group’s trading amount with which exceeds 2% of the Company Group’s consolidated net sales, in the most recent fiscal year. (2) An entity from which the Company Group has borrowed funds, where the total amount of the Company Group’s borrowings from the financial institutions exceeds 2% of the Company Group’s consolidated total assets in the most recent fiscal year. 4. A large amount of money or other assets refers to a monetary compensation value per fiscal year exceeds the higher of ¥10 million or 2% of the entity’s net sales in the most recent fiscal year. 5. Relatives refer to spouses, relatives within the second degree of kinship and those with whom a livelihood 6. Key business personnel refer to business personnel such as executive directors, executive officers and other officers who execute the operations of corporations, etc., as well as those who execute key operations, such 【Supplementary Principle 4.10.1 Authority and role of the Nomination Committee and Compensation The Board of Directors shall establish the Nomination Committee and the Compensation Committee. The Nomination Committee shall deliberate on appointment/dismissal of senior management and nomination of directors and kansayaku, and shall communicate the results of its deliberations to the Board of Directors for its deliberation and resolution, and each director shall make decisions with reference to such results. The Compensation Committee shall determine the specific amount of compensation, calculation method and other conditions for Directors based on the policy established by the Board of Directors and under the delegation by the Board of Directors. The majority members and the chairpersons of the Nomination Committee and the Compensation Committee shall be appointed from independent directors, in order to ensure their independence. 【Supplementary Principle 4.11.1 Policy on Diversity of the Board of Directors, etc.】 Our directors and kansayaku need to have a diverse and high level of knowledge, experience, and ability in order to supervise the execution of business and make important decisions. In particular, we believe that it is necessary to incorporate a wide range of knowledge and experience in business management including marketing and IT, and specialized knowledge in the areas of law, finance and accounting and human resources in addition to knowledge of McDonald’s Business. From the perspective of diversity and inclusion, we also believe it is important to maintain diversity in terms of gender, nationality, and background. In order to enable active and substantive deliberations, the maximum number of Directors and kansayaku shall be ten (10) and four (4), respectively, as stipulated in the Articles of Incorporation. Based on the above, we have prepared the following skill matrix and analyzed the skills of the current directors and Kansayuaku, and confirmed that the current directors and Kansayaku meet the above requirements 10 / 30 Top Management in Listed Company Marketing IT Law/ Compliance Finance Accounting Human Resources Global Business CSR McDonald’s Business 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 〇 Name Position Sarah L. Casanova Tamotsu Hiiro Atsuo Shimodaira Representative Director, Chairman Representative Director, President and CEO Representative Director, Executive Vice President and COO Director Director Director Robert D. Larson Arosha Wijemuni Jo Sempels Akira Kawamura Masataka Ueda Tetsu Takahashi Takaaki Ishii Ellen Caya Outside Independent Director Independent Director Independent Director Full-time Kansayaku Yuko Tashiro Yoshiyuki Honda Kansayaku Independent Kansayaku Independent Kansayaku (Note: This skills matrix does not represent all knowledge and experience of Directors and). 【Supplementary Principle 4.11.2 Status of concurrent positions of directors and Kansayaku】 The number of concurrent positions held by the Company’s directors and Kansayaku at other listed companies is kept within reasonable limits. The status of important concurrent positions held by the Company’s directors and Kansayaku are as follows. Position in the Name Name and position of the company at which you hold Company concurrent positions Representative Sarah L. Casanova McDonald’s Company (Japan), Ltd.: Representative Director, Chairperson Representative Tamotsu Hiiro McDonald’s Company (Japan), Ltd.: Director, President and Representative Director, President and CEO Director, Chairperson CEO 11 / 30 Representative Atsuo Shimodaira McDonald’s Company (Japan), Ltd.: Representative Director, Executive Vice President and COO Director, Executive Vice President and COO Director Arosha Wijemuni McDonald’s Global Franchising Limited: Corporate Vice President, Global Franchising Officer Director Jo Sempels McDonald’s Corporation: Independent Director Akira Kawamura Anderson Mori & Tomotsune: Of Counsel, Lawyer Senior Vice President International Developmental Licensed Markets Independent Director Masataka Ueda Director of The Board Director Training Institute of Japan, Public Adviser of Japan Association of Arbitrators Disciplinary Tribunal member of World Athletics Interest Incorporated Association Chairman of NPO Eggshell Membrane Association Adviser of Scala, Inc. Outside Director of Higashi-Nippon Bank, Ltd. Senior Director of Japan Golf Tour Organization Independent Director Tetsu Takahashi Representative Lawyer, ITN Law Office, Outside Director (Audit & Supervisory Committee Member) of Nomura Real Estate Holdings, Inc. Full-Time Kansayaku Takaaki Ishii McDonald’s Company (Japan), Ltd.: Outside Kansayaku Ellen Caya McDonald’s Corporation: Full-Time Statutory Auditor Vice President, Internal Audit and Chief Audit Executive Yuko Tashiro Director, Chairman of the Board of Accordia Golf Co., Ltd. Director, Chairman of the Board of Next Golf Management Co., Ltd. Independent Yoshiyuki Honda Representative Executive Officer and CFO, Sumida Corporation Outside Director of Yamaha Motor Co., Ltd. Director of NPO Mirai Kaihatsu Kenkyujo Director of NPO The First Tee of Japan 【Supplementary Principle 4.11.3 Evaluating the Effectiveness of the Board of Directors】 In order to improve the functioning of the Board of Directors, the Company will analyze and evaluate the effectiveness of the Board of Directors once a year based on the following perspectives at a meeting of the Board of Directors, based on a questionnaire survey conducted to each Director and Corporate Auditor. 1) Size and composition of the Board of Directors (2) Method of operation of the Board of Directors (3) Roles and responsibilities of the Board of Directors (4) Provision of information and training to directors and auditory & supervisory board memebers (5) Relationship with investors and shareholders The results of the above analysis and evaluation for fiscal 2021 are as follows. 12 / 30 Independent Kansayaku Kansayaku The Board of Directors of the Company assessed that the Board of Directors as a whole was effectively 1 Summary of Analysis and Evaluation Results (1) Conclusion fulfilling its roles and responsibilities in 2021. (2) Analysis and Evaluation (a) Size and composition of the Board of Directors – Although there is room for further improvement in the composition of the Board of Directors, the Board of Directors’ diversity (knowledge, experience, ability, gender, internationality, age, etc.) of its members (including Kansayaku) is adequately secured at present. (b) Method of operation of the Board of Directors meetings – The frequency of the Board of Directors meetings (once a month in principle), the schedule of the meetings, the number and contents of items to be discussed at the Board of Directors meetings, the deliberation time, and the explanations given on the day of the meetings were evaluated to be appropriate. – In addition, the Board of Directors was highly evaluated for the atmosphere of free and constructive discussion and exchange of opinions at the Board of Directors meetings, the active expression of opinions by Directors and Kansayaku, including Outside Directors and Kansayaku, and the appropriateness of the proceedings by the Chairperson of the Board of Directors. – On the other hand, the timing and amount of materials distributed at the Board of Directors’ meetings were evaluated as needing further improvement. (c) Roles and Responsibilities of the Board of Directors – With regard to the roles and responsibilities of the Board of Directors, the Board of Directors as a whole was evaluated to be effective in supervising management, which is one of the important roles and responsibilities of the Board of Directors, including the fact that the Board of Directors appropriately supervises the management’s response to major risks that may have a significant impact on the Company’s finances and operations, and that the Board of Directors appropriately manages conflicts of interest with the management and major shareholders. – On the other hand, discussions on the appointment and dismissal of directors and representative directors, and the supervision of succession planning by CEOs and other directors were confirmed to be in need of improvement in light of the Corporate Governance Code. (d) Provision of information and training to directors and Kansayaku – Although the provision of information and training to directors and Kansayaku was generally highly evaluated, there were some opinions that it needs to be further strengthened. In particular, it was evaluated as needing further improvement that there are cases where necessary information is not properly provided to outside directors and Kansayaku outside the Board of Directors. (e) Relationship with investors and shareholders – Financial information, such as the company’s financial position and operating results, and non-financial information, such as management strategies, management issues, risks, governance, and other information related to ESG factors, were evaluated as being disclosed and provided to users in a manner that is accurate, easy for users to understand, and highly useful as information. 13 / 30 【Supplementary Principle 4.14.2 Training Policy for Directors and Kansayaku】 We provide explanations of legal responsibility as directors or kansayaku, and our systems and businesses to newly appointed directors and kansayaku, and also provide such explanations at appropriate opportunities thereafter. We also invite them to attend the “Kick-off Meeting,” a business briefing session including franchisees and business partners at the beginning of the year, as well as various other briefing sessions held by the Company, and invite them to participate in product tasting, in order to deepen their understanding of the Company’s business and products. In addition, the Company will take necessary measures, including providing and mediating opportunities and supporting expenses, to enable directors and Kansayaku to attend external trainings, etc., when necessary. 【Principle 5.1, Supplementary Principle 5.1.2 Policy for Constructive Dialogue with Shareholders】 The Company’s policy on the development of systems and initiatives to promote constructive dialogue with shareholders is as follows. (i) General dialogue with shareholders The Company has appointed a person in charge of investor relations to oversee overall dialogue with shareholders, and established a division under his or her direction that is responsible for investor relations. (ii) Organic cooperation between divisions The division in charge of IR shares information as appropriate with the divisions in charge of public relations, corporate planning, general affairs, accounting, legal affairs, etc. In addition, depending on the case, a unified project is set up under the supervision of the person in charge of IR to ensure organic cooperation among the divisions. (iii) Enhancement of the means of dialogue In addition to responding individually to inquiries from shareholders and investors in each division, the Representative Director provides explanations to shareholders and investors at the general shareholders meetings and at the financial results briefings for the fiscal year and the second quarter. Other briefing sessions are also held as necessary. (iv) Feedback on the dialogue with shareholders The person in charge of IR shares the details of dialogue with shareholders and investors with the Board of Directors, Representative Director and other senior management as appropriate. （ｖ）Information management The Company has established rules for the prevention of insider trading and for the management of confidential information, and manages information accordingly. We will not provide insider information in dialogue with shareholders or investors. 14 / 30 Foreign shareholding ratio More than 30% 2. Capital structure Major shareholders [Updated] Name / Company name McDonald’s Restaurants of Canada, Limited MCD APMEA SINGAPORE INVESTMENTS PTE. LTD. JPMorgan Securities Japan Co., Ltd The Master Trust Bank of Japan, Ltd. (Account in Trust) BNYM SA/NV FOR BNYM FOR BNYM GCM CLIENT ACCTS M ILM FE BNYM TREATY DTT 15 UBS AG LONDON A/C IPB SEGREGATED CLIENT ACCOUNT STATE STREET BANK WEST CLIENT-TREATY 505234 GOLDMAN SACHS INTERNATIONAL MSCO CUSTOMER SECURITIES Number of shares owned Percentage (%) 33,575,000 13,385,000 1,633,184 1,276,100 1,076,547 1,022,748 993,500 980,162 873,140 777,395 25.25 10.07 1.23 0.96 0.81 0.77 0.75 0.74 0.66 0.56 Controlling shareholder (except for parent company) Parent company None None None Supplementary information 3. Corporate profile Fiscal year-end Type of business Listed stock market and market section Tokyo JASDAQ December Retail Number of employees (consolidated) as of the previous fiscal year-end More than 1,000 Net sales (consolidated) in the previous fiscal year More than \100 billion and less than \1 trillion Number of consolidated subsidiaries as of the previous fiscal year-end Less than 10 4. Policy on measures to protect minority shareholders in conducting transactions with controlling shareholder None 5. Other special circumstances that may have material impact on corporate governance None 15 / 30 10 2 years President Appointed 9 4 3 II. Business management organization and other corporate governance systems regarding decision-making, execution of business, and oversight in management 1. Organizational composition and operation Company with Kansayaku Board Maximum number of Directors stipulated in the articles of Association Term of office of Directors stipulated in the articles of Association Organization form Directors [Updated] Chairperson of the board Number of Directors Appointment of Outside Directors Number of Outside Directors 3 Number of Independent Directors Outside Directors’ relationship with the Company (1) [Updated] Name Attribute Relationship with the Company * a b c d e f g h i j k Jo Sempels From another company Akira Kawamura Lawyer Masataka Ueda From another company Tetsu Takahashi Lawyer 〇 * Categories for “Relationship with the Company” “〇” when the Director presently falls or has recently fallen under the category “△” when the Director fell under the category in the past “〇” when a close relative of the Director presently falls or has recently fallen under the category “▲”when a close relative of the Director fell under the category in the past a. Executive of the Company or its subsidiaries b. Non-executive Director or executive of a parent company of the Company c. Executive of a fellow subsidiary company of the Company d. Party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the Company or an executive thereof f. Consultant, accounting or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a Director/Kansayaku g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity) h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the Director himself/herself only) i. Executive of a company, between the Company and which Outside Directors/Kansayaku are mutually appointed (the Director himself/herself only) j. Executive of a company or organization that receives a donation from the Company (the Director himself/herself only) k. Others 16 / 30 Outside Directors’ relationship with the Company: 2 [Updated] Name Reasons for appointment Designation as Independent Director Jo Sempels Supplementary information of the relationship with the Company He is the senior Vice President of the International Developmental Licensed Markets of the U.S. McDonald’s Corporation that indirectly holds 35.32% (as of December 31, 2021) of the Company’s shares. － Mr. Jo Sempels has served as a head of finance and human resources and a managing director of several McDonald’s overseas for many years and has a wealth of experience and achievements as executives, as well as extensive insight into finance, human resources and McDonald’s business. Based on his past performance in his duties and his abundant insight, we have judged that he can contribute to the enhancement of the corporate value of the Company and appointed him as an outside director As a lawyer, Mr. Akira Kawamura has served as a partner of a law firm, the President of the International Bar Association (IBA), and the President of the Japan Association of Arbitrators, and has a wealth of experience and achievements as a lawyer in Japan and overseas, as well as a wealth of insight in corporate legal affairs, compliance, international legal affairs, and arbitration. Based on this wealth of experience and insight, he has given valuable advice and opinions on the Company’s management from an independent and objective perspective as an outside director of the Company since 2002. Based on this and other factors, the Company judged him to be suitable for continuing to strengthen the effectiveness of the supervisory function of the Board of Directors of the Company and appointed him as an independent outsidedirector. Also, he is listed as an independent director in the Tokyo Stock Exchange, based on our judgment that he meets the independence standards set forth in the “Guidelines for Listing Management, etc.” and the Standards and Qualifications for Independence set forth by the Company, and since there is no special interest in the Company, he will not cause any possible conflicts of interest with general shareholders. Mr. Masataka Ueda has served as a representative director, etc. of several companies and has abundant experience and achievements as a manager, as well as extensive insight into finance, marketing, human resources, etc. Based on this wealth of experience and insight, he has given valuable advice and opinions on the Company’s management from an independent and objective perspective as an outside director of the Company since 2016. Based on this and other factors, the 17 / 30 Akira Kawamura 〇 Masataka Ueda ○ － Tetsu Takahashi ○ － Company judged that he is qualified to continue to strengthen the effectiveness of the supervisory function of the Board of Directors of the Company and appointed him as an independent outside director. Also, he is listed as an independent director in the Tokyo Stock Exchange, based on our judgment that he meets the independence standards set forth in the “Guidelines for Listing Management, etc.” and the Standards and Qualifications for Independence set forth by the Company, and since there is no special interest in the Company, he will not cause any possible conflicts of interest with general shareholders. Mr. Tetsu Takahashi, as a lawyer, has served as a partner of a law firm and as an outside director and outside audit & supervisory Board member of several companies, and has a wealth of experience and achievements as a lawyer and as an outside director, as well as extensive insight into legal, compliance and corporate governance etc. Based on his wealth of experience and insight, he has been making useful comments from an independent and objective perspective as an outside director of McDonald’s Company (Japan), Ltd, a subsidiary of the Company, since 2007. Based on this and other factors, the Company judged that it would be appropriate to appoint him as an outside director of the Company in order to further strengthen the effectiveness of the supervisory function of the Board of Directors of the Company, and appointed him as an independent outside director. Also, he is listed as an independent director in the Tokyo Stock Exchange, based on our judgment that he meets the independence standards set forth in the “Guidelines for Listing Management, etc.” and the Standards and Qualifications for Independence set forth by the Company, and since there is no special interest in the Company, he will not cause any possible conflicts of interest with general shareholders. Voluntary establishment of committee(s) corresponding to a nominating committee or remuneration committee Established Voluntary establishment of committee corresponding to nominating committee remuneration committee Name of committee Nomination committee Compensation committee Number of total members Full- Time member (X) Internal Director (X) Outside Director (X) Outside Expert (X) Others (X) Chairman 5 5 0 0 2 2 3 3 0 0 0 0 Outside Director Outside Director 18 / 30 Supplementary information [Updated] The Nomination Committee and the Compensation Committee have been established as an optional advisory bodies under the Board of Directors to ensure objectivity and transparency in matters such as the selection/dismissal of Director and remuneration of Directors. The members of these committees are selected by the Board of Directors and a majority of the members of these committees are Independent Outside Directors. These committees are chaired by Independent Outside Directors. The Nomination Committee deliberates on the selection and dismissal of Directors and Kansayaku, and the Board of Directors makes decisions on the selection and dismissal of Directors and Kansayaku, referring to the results of the deliberations. The members of the Nomination Committee are as follows: Masataka Ueda (Chairperson of the Nomination Committee / Independent Outside Director), Sarah L. Casanova (Representative Director, Chairperson of the Board), Robert D. Larson (Director), Akira Kawamura (Independent Outside Director), Tetsu Takahashi (Independent Outside Director) In Addition, remuneration for Directors is determined by the Compensation Committee. The remuneration decision for the Director who is a member of the Remuneration Committee will be made by the other members of the Remuneration Committee. The Compensation Committee determines the specific amount of remuneration or calculation method and other conditions for Directors based on the policy established by the Board of Directors and the delegation from the Board of Directors. The members of the Compensation Committee are as follows: Akira Kawamura (Chairperson of the Compensation Committee / Independent Director), Sarah L. Casanova (Representative Director, Chairman of the Board), Robert D. Larson (Director), Masataka Ueda (Independent Outside Director), Tetsu Takahashi (Independent Outside Director) Kansayaku Establishment of Kansayaku Board Established Maximum number of Kansayaku Board stipulated in the Articles of Association Number of Kansayaku Board 4 4 Cooperation among Kansayaku , Independent Auditors and Internal Audit Function Ernst & Young ShinNihon LLC, the Independent Auditor, Internal Audit and the Kansayaku Board are responsible for reporting the results of statutory audits based on the Corporate Law and the Financial Instruments and Exchange Act. In addition, collaborations are made including a mutual exchange of information and opinions as required, striving to secure the effectiveness and efficiency of audits. Appointment of Outside Kansayaku Number of Outside Kansayaku Number of Independent Kansayaku Appointed 3 2 19 / 30 Outside Kansayaku’s relationship with the Company: 1 Name Attribute Ellen Caya From another company Yuko Tashiro CPA Yoshiyuki Honda CPA Relationship with the Company * a b d e c f g h i j k ○ * Categories for “Relationship with the Company” “◯” when the Kansayaku presently falls or has recently fallen under the category “