東京楽天地（8842） – Notice of the 123rd Annual General Meeting of Shareholders

Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. (Securities Code: 8842) April 5, 2022 To Our Shareholders: Toshiyuki Urai, Representative Director and President TOKYO RAKUTENCHI CO., LTD. 4-27-14, Kotobashi, Sumida-ku, Tokyo Notice of the 123rd Annual General Meeting of Shareholders We are pleased to announce the 123rd Annual General Meeting of Shareholders of TOKYO RAKUTENCHI Co., Ltd. (the “Company”) to be held as described below. If you are unable to attend the meeting, you are entitled to exercise your voting rights in writing or via the Internet in accordance with the instruction. In this case, please read the attached Reference Documents of the Annual General Meeting of Shareholders, and exercise your voting rights by 6:20 p.m. on Tuesday, April 26, 2022 (JST). 1. Date and Time: Wednesday, April 27, 2022, at 10:30 a.m. (JST) 2. Venue: “TOHO Cinemas Kinshicho Rakutenchi,” Screen 9 6th floor of Rakutenchi Building, 4-27-14, Kotobashi, Sumida-ku, Tokyo 3. Purpose of the Meeting Matters to be reported: 1. Business Report and Consolidated Financial Statements for the 123rd Fiscal Year (from February 1, 2021 to January 31, 2022), as well as Audit Reports for the Consolidated Financial Statements by the financial auditor and the Audit and Supervisory Committee 2. Non-consolidated Financial Statements for the 123rd Fiscal Year (from February 1, 2021 to January 31, 2022) Matters to be resolved: Proposal No. 1 Appropriation of Surplus Proposal No. 2 Partial Changes to Articles of Incorporation Proposal No. 3 Election of Five Directors (Excluding Directors Who Are Audit and Supervisory Committee Members) Proposal No. 4 Election of Four Directors Who Are Audit and Supervisory Committee Members Proposal No. 5 Revision of Amount of Remuneration for Directors (Excluding Directors Who Are Audit and Supervisory Committee Members) Proposal No. 6 Determination of Remuneration for Granting Share-based Remuneration (Restricted Shares) to Directors (Excluding Directors Who Are Audit and Supervisory Committee Members) Proposal No. 7 Determination of Amount of Performance Achievement-Based Bonus for Directors (Excluding Directors Who Are Audit and Supervisory Committee Members) Response to the spread of COVID-19 If you intend to attend the General Meeting of Shareholders in person, please be sure to check the COVID-19 situation and your own health condition as of the date of the meeting, and take preventive measures such as wearing a face mask, before coming to the meeting. Staff members operating the General Meeting – 1 – of Shareholders will also wear face masks and take measures to prevent infection at the venue of the meeting, and we would like to ask for your understanding and cooperation in this matter. – When attending the meeting in person, please present the enclosed voting form at the reception desk. In addition, in the interests of saving resources, please bring this notice with you. – The following items are provided on the Company’s website (https://www.rakutenchi.co.jp/, in Japanese only) on the Internet pursuant to laws and regulations and Article 16 of the Company’s Articles of Incorporation, and are not included in this notice. (i) Notes to Consolidated Financial Statements (ii) Notes to Non-consolidated Financial Statements Therefore, the Consolidated Financial Statements and the Non-consolidated Financial Statements included in the attached documents to this notice are a part of the Consolidated Financial Statements and the Non-consolidated Financial Statements audited by the Audit and Supervisory Committee and the financial auditor in preparing the respective Audit Reports. – If revisions to the contents of the Business Report, the Consolidated Financial Statements, the Non-consolidated Financial Statements, and the Reference Documents for the General Meeting of Shareholders, the Company shall publish a notification on the Company’s website at the following URL: https://www.rakutenchi.co.jp/ (in Japanese only) – 2 – Proposals and Reference Information Reference Documents for the General Meeting of Shareholders Appropriation of Surplus Proposal No. 1 The Group seeks to maintain internal reserves for strengthening the corporate structure and makes it its basic policy to pay stable dividends for the future. Specifically, the Company will aim for a consolidated dividend payout ratio of 30%, with a minimum annual dividend of ¥60 per share. If business performance improves, the Company will review the guideline consolidated dividend payout ratio and the amount of dividends. Amid the continued challenging business environment, in accordance with the above basic policy, the Company proposes to pay year-end dividends as described below. In order to ensure agility in capital policy, the Company will reverse a part of general reserves and transfer it to retained earnings brought forward for the purpose of ensuring the efficiency of its capital policy as described below. 1. Appropriation of surplus (1) (2) Item of surplus to be decreased and amount of decrease General reserves: ¥18,350,000,000 Item of surplus to be increased and amount of increase Retained earnings brought forward: ¥18,350,000,000 2. Year-end dividends (1) Allotment of dividend property to shareholders and their aggregate amount ¥30 per common share of the Company Total payment: ¥179,374,260 (2) Effective date of dividends of surplus April 28, 2022 Accordingly, including the interim dividend of ¥30 per share, the annual dividend will total ¥60 per share. – 3 – Proposal No. 2 1. Reasons for the changes Partial Changes to Articles of Incorporation (1) In connection with strengthening the supervisory function of the Board of Directors and introducing an Executive Officer system to enhance its corporate governance, the Company proposes to make the following partial changes to relevant Articles of Incorporation of the Company. (2) Since the revised provisions provided for in a proviso to Article 1 of the Supplementary Provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019) are to be enforced during 2022, to prepare for the introduction of the system for providing informational materials for the general meeting of shareholders in electronic format, the Company proposes to delete Article 16 (Internet Disclosure and Deemed Provision of Reference Documents for the General Meeting of Shareholders, Etc.) of the current Articles of Incorporation, newly establish Article 16 (Measures for Providing Information in Electronic Format, Etc.) and set forth supplementary provisions regarding the date of enforcement, etc. (3) In addition, the Company intends to make necessary changes in line with the above- mentioned changes, such as adjustment of the article numbers. 2. Details of the changes Details of the changes are as follows: (The underlined part represents the proposed changes.) Current Articles of Incorporation Chapter II Shares Proposed changes Chapter II Shares (Share Handling Regulations) Article 12. (Share Handling Regulations) Article 12. Procedures for exercising shareholder rights and other handling of the Company’s shares and the fees therefor shall be governed by the Share Handling Regulations established by the Board of Directors, in addition to applicable laws and regulations and the Articles of Incorporation. Procedures for exercising shareholder rights and other handling of the Company’s shares and the fees therefor shall be governed by the Share-Handling Regulations established by the Board of Directors, in addition to applicable laws and regulations and the Articles of Incorporation. (Change in Japanese only; English unchanged) Chapter III General Meeting of Shareholders Chapter III General Meeting of Shareholders (Convocation) Article 14. An annual general meeting of shareholders of the Company shall be convened within three months from February 1 every year. An extraordinary general meeting of shareholders shall be convened whenever necessary. An annual general meeting of shareholders of the Company shall be convened within three months from February 1 every year. An extraordinary general meeting of shareholders shall be convened whenever necessary. (Change in Japanese only; English unchanged) (Convener and Chairmanship of General Meeting of Shareholders) Article 15. (Convener and Chairmanship of General Meeting of Shareholders) Article 15. 1. The Director and President shall convene general meetings of shareholders and chair the meetings. 2. In cases where the Director and President is prevented from so acting, another Director who is designated in accordance with an order of priority determined in advance by the Board of Directors shall convene a general meeting of shareholders and chair the meeting. 1. The Director who is appointed by a resolution of the Board of Directors in advance shall convene general meetings of shareholders and chair the meetings. 2. In cases where the Director specified in the preceding paragraph is prevented from so acting, another Director who is designated in accordance with an order of priority determined in advance by the Board of Directors shall convene a general meeting of shareholders and chair the meeting. (Convocation) Article 14. – 4 – Chapter IV Directors, the Board of Directors, and the Audit and Supervisory Committee Chapter IV Directors, the Board of Directors, Executive Officers, and the Audit and Supervisory Committee Current Articles of Incorporation Proposed changes (Internet Disclosure and Deemed Provision of Reference Documents for the General Meeting of Shareholders, Etc.) (Deleted) Article 16. When the Company convenes a general meeting of shareholders, if it discloses information that is to be stated or indicated in the reference documents of the general meeting of shareholders, business report, financial statements and/or consolidated financial statements through the internet in accordance with the provisions prescribed by the Ordinance of the Ministry of Justice, it may be deemed that the Company has provided this information to shareholders. (Newly established) (Measures for Providing Information in Electronic Format, Etc.) Article 16. 1. When the Company convenes a general meeting of shareholders, it shall take measures for providing information that constitutes the content of reference documents for the general meeting of shareholders, etc. in electronic format. 2. Among items for which the measures for providing information in electronic format will be taken, the Company may exclude all or some of those items designated by the Ministry of Justice Order from statements in the paper-based documents to be delivered to shareholders who requested the delivery of paper-based documents by the record date of voting rights. (Number of Directors) Article 20. 1. The Company shall have not more than ten Directors. 2. (Unchanged) (Representative Directors, Advisor and Commissioner) (Convener and Chairmanship of Meeting of the Board of Directors) Article 24. 1. Unless otherwise provided for by laws and regulations, the Director who is appointed by a resolution of the Board of (Number of Directors) Article 20. 1. The Company shall have not more than 18 Directors. 2. Of the Directors, the number of Directors who are Audit and Supervisory Committee Members shall be no more than five, the majority of whom shall be outside Directors. (Representative Directors, Directors with Special Titles, Advisor and Commissioner) Article 23. 1. The Board of Directors shall appoint representative (Unchanged) Director(s) among Directors (excluding Directors who are Audit and Supervisory Committee Members) by its resolution. 2. The Board of Directors may appoint, by its resolution, one (Deleted) Article 23. 3. The Board of Directors may have Advisor(s) and 2. (Unchanged) Director and Chairman, one Director and President, one or a small number of Director and Vice Presidents, one or a small number of Senior Managing Directors, and one or a small number of Managing Directors among Directors (excluding Directors who are Audit and Supervisory Committee Members). Commissioner(s) by its resolution. (Convener and Chairmanship of Meeting of the Board of Directors) Article 24. 1. Unless otherwise provided for by laws and regulations, the Director and President shall convene meetings of the Board of Directors and chair the meetings. – 5 – (Newly established) (Newly established) Current Articles of Incorporation Proposed changes Directors in advance shall convene meetings of the Board of Directors and chair the meetings. 2. Notwithstanding the preceding paragraph, the Audit and Supervisory Committee Members appointed by the Audit and Supervisory Committee may convene meetings of the Board of Directors. 2. (Unchanged) 3. In cases where the Director and President is prevented from so acting, another Director who is designated in accordance with an order of priority determined in advance by the Board of Directors shall convene meetings of the Board of Directors and chair the meetings. 3. In cases where the Director specified in paragraph 1. is prevented from so acting, another Director who is designated in accordance with an order of priority determined in advance by the Board of Directors shall convene meetings of the Board of Directors and chair the meetings. Article 32 to Article 42 (Omitted) Article 33 to Article 43 (Unchanged) Supplementary Provisions Supplementary Provisions (Executive Officers) Article 32. resolution. 1. The Board of Directors may elect Executive Officer(s) by its 2. An Executive Officer has responsibility and authority to execute duties of the Company under the supervision of the Board of Directors. 3. An Executive Officer may serve concurrently as Director. 4. The Board of Directors may appoint, by its resolution, one Executive Officer and Chairman, one Executive Officer and President, one or a small number of Executive Officer and Vice Presidents, one or a small number of Senior Managing Executive Officers, and one or a small number of Managing Executive Officers among Executive Officers. (Effective date, etc.) Article 2. 1. The deletion of Article 16 (Internet Disclosure and Deemed Provision of Reference Documents for the General Meeting of Shareholders, Etc.) of the current Articles of Incorporation and the new establishment of the proposed revision of Article 16 (Measures for Providing Information in Electronic Format, Etc.) shall be effective from the date of enforcement of the revised provisions provided for in the proviso to Article 1 of the Supplementary Provisions of the Act Partially Amending the Companies Act (Act No. 70 of 2019) (hereinafter referred to as the “Date of Enforcement”). 2. Notwithstanding the provisions of the preceding paragraph, Article 16 of the current Articles of Incorporation shall remain effective regarding any general meeting of shareholders held on a date within six months from the Date of Enforcement. 3. This Article shall be deleted on the date when six months have elapsed from the Date of Enforcement or three months have elapsed from the date of the general meeting of shareholders in the preceding paragraph, whichever is later. – 6 – Proposal No. 3 Election of Five Directors (Excluding Directors Who Are Audit and Supervisory Committee Members) As of the conclusion of this annual general meeting of shareholders, the terms of office of all ten Directors (excluding Directors who are Audit and Supervisory Committee Members; the same shall apply to the rest of this proposal) will expire. The Company will then introduce an Executive Officer system to enhance its corporate governance. Therefore, the Company proposes the election of five Directors, lowering the number of Directors buy five. With respect to this proposal, the Audit and Supervisory Committee has expressed its opinion that all the candidates for Directors are suitable for the position. The candidates for Director are as follows: Candidate No. Name (Date of birth) Career summary, position and responsibility in the Company, and significant concurrent positions outside the Company Number of the Company’s shares owned 2,900 Toshiyuki Urai (December 17, 1957) Reelection Apr. 1980 May 2003 Apr. 2004 May 2009 Apr. 2017 Apr. 2020 Apr. 2021 Joined Toho Co., Ltd. Director Outside Audit and Supervisory Board Member of the Company Managing Director of Toho Co., Ltd. Outside Director of the Company (Audit and Supervisory Committee Member) Representative Director and President Representative Director and President (in charge of legal affairs) (current position) Reason for nomination as candidate for Director Toshiyuki Urai currently serves as Representative Director and President in charge of legal affairs, appropriately supervising decision-making on important management issues and business execution, along with demonstrating leadership over the overall business execution. He has a track record of leading the Company with strong leadership and management knowledge and experience in a wide range of industries, and the Company judges the candidate will be able to contribute to its sustainable growth as a Director. Hitoshi Matsuda (January 22, 1956) Reelection 1,100 Apr. 1979 May 2006 May 2010 Oct. 2015 Apr. 2017 Apr. 2018 Apr. 2021 Joined Toho Real Estate Co., Ltd. Director in charge of real estate management, Sales Div. Managing Director in charge of real estate management, Sales Div. Managing Director and General Manager of Real Estate Business Div., in charge of real estate management, real estate sales, facility management, and operations Managing Director of the Company (in charge of real estate management and disaster prevention management) Managing Director (in charge of real estate management) Senior Managing Director (in charge of real estate management) (current position) Reason for nomination as candidate for Director Hitoshi Matsuda, after serving as Managing Director of Toho Real Estate Co., Ltd. and in other positions, currently serves as Senior Managing Director in charge of real estate management of the Company and appropriately supervises decision-making on important management issues and business execution. He has extensive knowledge and experience in real estate management and facility management, and the Company judges the candidate will be able to contribute to its sustainable growth as a Director. 1 2 – 7 – 3 4 Candidate No. Name (Date of birth) Career summary, position and responsibility in the Company, and significant concurrent positions outside the Company Number of the Company’s shares owned Reason for nomination as candidate for Director Hajime Okamura currently serves as Managing Director in charge of corporate planning and accounting and appropriately supervises decision-making on important management issues and business execution. He has extensive knowledge and experience in management strategy and finance and demonstrates leadership in management of the Group, and the Company judges he will be able to contribute to its sustainable growth as a Director. Hajime Okamura (January 6, 1967) Reelection Yoshishige Shimatani (March 5, 1952) Reelection Apr. 1988 Apr. 2011 Apr. 2012 Apr. 2014 Apr. 2016 Apr. 2018 Apr. 2019 Apr. 1975 May 2001 May 2005 May 2007 May 2011 Apr. 2012 June 2015 June 2017 June 2019 Apr. 2020 May 2021 Joined the Company General Manager of Real Estate Management Dept. General Manager of Accounting Dept. Director and General Manager of Accounting Dept. Director and General Manager of Accounting Dept. (in charge of accounting) Director (in charge of accounting) Managing Director (in charge of corporate planning and accounting) (current position) Joined Toho Co., Ltd. Director Managing Director Senior Managing Director President and Representative Director Outside Director of the Company Director of Hankyu Hanshin Holdings, Inc. (current position) Outside Director of Fuji Media Holdings, Inc. (current position) Outside Director of Tokyo Kaikan Co., Ltd. (current position) Director of the Company (current position) Representative Director and President, and President and Executive Officer of Toho Co., Ltd. (current position) 800 500 Reason for nomination as candidate for Director Yoshishige Shimatani is Representative Director and President of Toho Co., Ltd. and has a wide range of experience and insight as a manager. The Company judges the candidate will be able to strengthen corporate governance by providing appropriate guidance and advice on the Company’s overall management. – 8 – Candidate No. Name (Date of birth) Career summary, position and responsibility in the Company, and significant concurrent positions outside the Company Number of the Company’s shares owned Kazuo Sumi (April 19, 1949) Reelection 5 500 Apr. 1973 June 2000 June 2002 June 2003 Apr. 2005 Oct. 2007 May 2009 Mar. 2014 Apr. 2015 May 2016 June 2017 Mar. 2018 May 2018 May 2019 Apr. 2020 Joined Hankyu Corporation Director and General Manager of Railroad Business Div. Managing Director President and Representative Director (Hankyu Corporation changed its name to Hankyu Holdings, Inc. in April 2005 and to Hankyu Hanshin Holdings, Inc. in October 2006) President and Representative Director of Hankyu Corporation (new company) Director of H2O Retailing Corporation (current position) Outside Director of Toho Co., Ltd. Chairman and Representative Director of Hankyu Corporation (current position) Outside Director of the Company Outside Director of Toho Co., Ltd. (Audit & Supervisory Committee Member) Chairman and Representative Director, and Group CEO of Hankyu Hanshin Holdings, Inc. (current position) Outside Director of ASICS Corporation (current position) Outside Director of Toho Co., Ltd. Director (current position) Director of the Company (current position) Notes: Reason for nomination as candidate for Director Kazuo Sumi is Chairman and Representative Director, and Group CEO of Hankyu Hanshin Holdings, Inc. and has a wide range of experience and insight as a manager. The Company judges the candidate will be able to strengthen corporate governance by providing appropriate guidance and advice on the Company’s overall management. 1. There is no special interest between any of the candidates and the Company. 2. Yoshishige Shimatani and Kazuo Sumi are currently non-Executive Directors, and pursuant to the provisions of the Articles of Incorporation of the Company, Mr. Shimatani and Mr. Sumi have entered into an agreement respectively with the Company to limit their liability for damages under Article 423, paragraph (1) of the Companies Act. The maximum amount of liability for damages under this agreement is the minimum liability amount provided for under Article 425, paragraph (1) of the said Act. If the reelection of Mr. Shimatani and Mr. Sumi is resolved, the Company plans to renew the aforementioned agreement with them. 3. The Company has entered into a directors’ and officers’ liability insurance policy with an insurance company as provided for in Article 430-3, paragraph (1) of the Companies Act, and the policy was renewed in March 2022. The policy covers the costs of litigation and compensation for damages incurred by the insured in third party lawsuits and shareholder lawsuits. If the election of each candidate is approved, they will be included in the insured of the said insurance policy. – 9 – 1 2 Election of Four Directors Who Are Audit and Supervisory Committee Members Proposal No. 4 At the conclusion of this annual general meeting of shareholders, all four Directors who are Audit and Supervisory Committee Members will retire due to the enhancement of corporate governance such as the introduction of an Executive Officer system. Therefore, the Company proposes the election of four Directors who are Audit and Supervisory Committee Members. In addition, the consent of the Audit & Supervisory Committee has been obtained for this proposal. Candidates for Directors who are Audit and Supervisory Committee Members are as follows. Candidate No. Name (Date of birth) Career summary, position and responsibility in the Company, and significant concurrent positions outside the Company Number of the Company’s shares owned Taihei Matsumoto (September 22, 1963) Reelection Apr. 1986 May 2014 Apr. 2016 Dec. 2016 Apr. 2017 Joined Toho Real Estate Co., Ltd. Director in charge of general affairs Director in charge of general affairs and accounting Director in charge of general affairs, accounting, insurance, and Kansai branch Outside Director of the Company (full-time Audit and Supervisory Committee Member) (current position) Reason for nomination as candidate for Director Taihei Matsumoto had engaged in general affairs and accounting at Toho Real Estate Co., Ltd. for many years, and currently serves as a full-time Audit and Supervisory Committee Member of the Company. He has extensive experience and insight in general affairs and accounting, and the Company judges the candidate will be able to provide advice on the Company’s management from a broad perspective and conduct appropriate audits and supervision. Koji Ohnishi (September 10, 1982) Reelection Dec. 2010 Dec. 2010 Apr. 2017 Registered as an attorney at law (Daiichi Tokyo Bar Association) (current position) Joined the Ohnishi Shoichiro Law Office (current position) Outside Director of the Company (Audit and Supervisory Committee Member) (current position) Reason for nomination as candidate for outside Director and summary of expected role Koji Ohnishi is well versed in the industry to which the Company belongs, and has professional knowledge and experience as an attorney at law. The Company judges the candidate will be able to utilize his extensive experience and in-depth insight for appropriate decision-making at the Board of Directors and management audits and supervision from an objective and fair perspective. 1,100 0 – 10 – 3 4 0 0 Candidate No. Name (Date of birth) Career summary, position and responsibility in the Company, and significant concurrent positions outside the Company Number of the Company’s shares owned Tomoko Sone (November 13, 1965) New election Apr. 1989 Sept. 2001 Sept. 2001 Jan. 2003 May 2003 Apr. 2010 Apr. 2012 Oct. 2015 Apr. 2016 Oct. 2018 Joined POLA Cosmetics, Inc. (present POLA INC.) Retired Joined K.MIKIMOTO & CO., LTD. Retired Joined Kagome Co., Ltd. Manager of Advertisement Dept. Manager of IR Dept., Corporate Communication Div. Manager of Diversity Promotion Dept. Executive Officer and Manager of Diversity Promotion Dept. Executive Officer and Manager of Health Promotion Dept., in charge of Women’s Participation and Advancement (current position) Reason for nomination as candidate for outside Director and summary of expected role Tomoko Sone has been in charge of diversity and women’s participation and advancement and has relevant experience and professional knowledge. The Company judges the candidate will be able to utilize her extensive experience and in-depth insight for appropriate decision-making at the Board of Directors and management audits and supervision from an objective and fair perspective. Yoshiyuki Yamasaki (November 11, 1956) New election Apr. 1979 Mar. 1982 Dec. 1988 July 1993 Dec. 1998 June 2007 Apr. 2019 July 2019 June 2021 July 2021 Joined Asahi Audit Corporation (present KPMG AZSA LLC) Registered as a certified public accountant Transferred to the New York branch Partner Transferred to the Tokyo branch General Manager of Transaction Service Div. Manager of Risk Management Dept. Senior Managing Officer Retired Established Yamasaki Yoshiyuki Accounting Office (current position) Reason for nomination as candidate for outside Director and summary of expected role Yoshiyuki Yamasaki had engaged in accounting audits at KPMG AZSA LLC for many years and he has in-depth insight in accounting and auditing, as well as expertise in financial due diligence and other advisory services. The Company judges the candidate will be able to utilize his extensive experience and in-depth insight for appropriate decision-making at the Board of Directors and management audits and supervision from an objective and fair perspective. Notes: 1. There is no special interest between any of the candidates and the Company. 2. Koji Ohnishi, Tomoko Sone, and Yoshiyuki Yamasaki are candidates for outside Directors, and Mr. Ohnishi has served as an outside Director who is an Audit and Supervisory Committee Member of the Company for five years. 3. The legal name of Tomoko Sone, registered in the family register, is Tomoko Nonaka. 4. The Company has given notification that Koji Ohnishi is an independent officer in accordance with the provisions of the Tokyo Stock Exchange, and plans to continue to designate him as an independent officer if the reelection of Mr. Ohnishi is approved. If the election of Tomoko Sone and Yoshiyuki Yamasaki is approved, the Company plans to submit notification to Tokyo Stock Exchange, Inc. concerning their designation as independent officers. 5. Taihei Matsumoto meets the requirements as an outside Director under Article 2, item (xv) of the Companies Act. However, he was an Executive Director of Toho Real Estate Co., Ltd. which was a subsidiary of Toho Co., Ltd., one of the major shareholders of the Company. Therefore, the Company proposes to elect him as a Director who is not an outside Director (an Audit & Supervisory Committee Member). 6. Taihei Matsumoto and Koji Ohnishi are currently outside Directors, and they have entered into an agreement respectively with the Company to limit their liability for damages under Article 423, paragraph (1) of the Companies Act. The maximum amount of liability for damages under this agreement is the minimum liability amount provided for under Article 425, paragraph (1) of the said Act. If the election of Mr. Matsumoto, Mr. Ohnishi, Ms. Sone and Mr. Yamasaki is approved, the Company plans to renew the aforementioned agreement with Mr. Matsumoto and Mr. Ohnishi, and newly enter into the aforementioned agreement with Ms. Sone and Mr. Yamasaki. – 11 – 7. The Company has entered into a directors’ and officers’ liability insurance policy with an insurance company as provided for in Article 430-3, paragraph (1) of the Companies Act, and the policy was renewed in March 2022. The policy covers the costs of litigation and compensation for damages incurred by the insured in third party lawsuits and shareholder lawsuits. If the election of each candidate is approved, they will be included in the insured of the said insurance policy. – 12 – (Reference) Skills matrix of individual candidates Candidate Directors (excluding Directors who are Audit and Supervisory Committee Members) Candidate attributes Name Management experience Planning and development Marketing Legal affairs Risk management ESG and sustainability Toshiyuki Urai Hitoshi Matsuda Hajime Okamura Reelection Reelection Reelection Reelection Yoshishige Shimatani Reelection Candidates for Directors who are Audit and Supervisory Committee Members ○ ○ ○ ○ ○ ○ Kazuo Sumi ○ Labor management Human resource development Labor management Human resource development ○ Finance and accounting Group business management ○ ○ Finance and accounting Group business management ○ Candidate attributes Name Management experience Planning and development Marketing Legal affairs Risk management ESG and sustainability ○ ○ Koji Ohnishi Taihei Matsumoto Reelection Reelection Outside Independent New election Outside Independent New election Outside Independent * With regard to non-Executive Directors who are not outside Directors and Audit and Supervisory Committee Members, the list Yoshiyuki Yamasaki Tomoko Sone ○ ○ ○ ○ ○ ○ ○ includes those skills expected in particular by the Company. * The list above may not include all of the skills possessed by individual candidates. – 13 – Proposal No. 5 Revision of Amount of Remuneration for Directors (Excluding Directors Who Are Audit & Supervisory Committee Members) The amount of remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members; the same shall apply to the rest of the proposal) of the Company was approved as not more than ¥250 million per year (not more than ¥12 million of which is for outside Directors) at the 121st Annual General Meeting of Shareholders held on April 28, 2020. However, considering that the Company proposes to reduce the number of Directors in accordance with the introduction of an Executive Officer system in Proposal No. 2 “Partial Changes to Articles of Incorporation,” the Company proposes to revise the annual amount of remuneration for Directors to not more than ¥200 million. The current number of Directors is ten (of whom none are outside Director), and if Proposal 3 is approved and adopted in its original form, the number of Directors will be five (including zero outside Directors). [Reason for Regarding Revision of Amount of Remuneration as Reasonable] This proposal which takes into consideration the reduction of the number of Directors, together with Proposals No. 6 and No. 7 which are concurrently submitted, intends to offer incentives towards a sustainable increase in the Company’s corporate value. Therefore, the Board of Directors of the Company judges that this proposal is appropriate. Proposal No. 6 Determination of Remuneration for Granting Share-based Remuneration (Restricted Shares) of Directors (Excluding Directors Who Are Audit and Supervisory Committee Members) The Company proposes in Proposal No. 5 to revise the annual amount of remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members) to not more than ¥200 million. With a view to offering incentives towards a sustainable increase in the Company’s corporate value to Executive Directors among the Company’s Directors (excluding Directors who are Audit and Supervisory Committee Members) (the “Eligible Directors”), while promoting further sharing of value with shareholders, separately from the aforementioned maximum amount of remuneration and that of Proposal No. 7 “Setting of the Amount of Performance Achievement-Based Bonus for Directors (Excluding Directors Who Are Audit and Supervisory Committee Members),” the Company proposes to pay new remuneration for granting restricted shares to Eligible Directors. The Eligible Directors shall pay all monetary remuneration claims to be provided under this proposal in the form of property contributed in kind, in accordance with the resolution of the Board of Directors of the Company, and shall, in return, receive common shares of the Company that shall be issued or disposed of by the Company. The annual aggregate amount of cash remuneration to Eligible Directors for the purpose of granting restricted shares shall not exceed ¥50 million, which is an amount deemed to be appropriate in consideration of the aforementioned purposes. The total number of common shares of the Company to be issued or disposed of in this way shall be not more than 15,000 shares per year. However, if the total number of issued shares of the Company increases or decreases as a result of a share consolidation or share split (including allotment of shares without contribution), the maximum number of shares shall be adjusted according to the respective ratio. The amount to be paid in per issued or disposed share shall be determined by the Board of Directors based on the closing price of common shares of the Company on the Tokyo Stock Exchange on the business day immediately before the date of each resolution by the Board of Directors (if there is no closing price on such date, the closing price on the closest preceding trading day) and as an amount within the extent that it will not be particularly advantageous to the Eligible Directors. In addition, the specific allocation to each Eligible Director shall be deliberated by the Nomination and Remuneration Committee which the Company plans to establish, and the Board of Directors shall make the final decision based on the advice and recommendations of the committee. If Proposal No. 3 is approved and adopted in its original form, the number of the Eligible Directors in this proposal will be three. – 14 – (7) In addition, for the purpose of granting restricted shares under this Proposal, an agreement on the allotment of restricted shares (the “Allotment Agreement”) shall be entered into between the Company and each Eligible Director. The overview of the terms is as follows. (1) Eligible Directors shall not transfer, create a security interest on, or otherwise dispose of (the “Transfer Restriction”) the common shares of the Company allotted under the Allotment Agreement (the “Allotted Shares”) for the period from the date the Allotted Shares are granted to the date that said Eligible Director resigns or retires as a Director of the Company or any other such position stipulated by the Company’s Board of Directors (the “Transfer Restriction Period”). (2) If an Eligible Director resigns or retires from the position specified in the provision of (1) above before the expiration of the period stipulated by the Board of Directors of the Company (the “Service Period”), the Company shall automatically acquire the Allotted Shares without contribution, unless there is a reason that the Board of Directors of the Company deems justifiable. (3) The Company shall lift the Transfer Restriction for all of the Allotted Shares upon expiration of the Transfer Restriction Period, on the condition that the Eligible Director continuously has remained in the position specified in the provision of (1) above throughout the Service Period. However, that if the Eligible Director resigns or retires from the position specified in the provision of (1) above before the expiration of the Service Period due to the reason the Board of Directors of the Company deems justifiable, which is specified in the provision of (2) above, the number of the Allotted Shares on which the Transfer Restriction is to be lifted shall be rationally adjusted as needed. (4) The Company shall acquire, by rights, without contribution the Allotted Shares on which the Transfer Restriction has not been lifted at the expiration of the Transfer Restriction Period in accordance with the provision of (3) above. (5) If during the Transfer Restriction Period, the Company shall automatically acquire without compensation the Allotted Shares if an Eligible Director violates laws and regulations, internal rules or the Allotment Agreement or falls under some other reasons, which the Board of Directors prescribes as reasonable for the Company to acquire such shares without contribution. (6) Notwithstanding the provision of (1) above, if, during the Transfer Restriction Period, matters relating to a merger agreement in which the Company is the disappearing company, a share exchange agreement or share transfer plan in which the Company becomes a wholly owned subsidiary, or other reorganization, etc. are approved at the general meeting of shareholders of the Company (or at a meeting of its Board of Directors in cases where approval at the general meeting of shareholders is not required in relation to the reorganization, etc.), the Company shall lift the transfer restrictions on the Allotted Shares with the number of shares that is reasonably determined by resolution of the Board of Directors of the Company. In cases specified (6) above, the Company shall automatically acquire without contribution the Allotted Shares on which the transfer restrictions have not been lifted as of the time immediately after the transfer restrictions were lifted in accordance with the provision of (6) above. [Reasons why it is appropriate to grant restricted shares] This proposal is to provide remuneration for granting restricted shares to the Eligible Directors, with a view to offering incentives towards a sustainable increase in the corporate value of the Company, while promoting further sharing of value with shareholders. At the Board of Directors meeting held on March 10, 2022, the Company formulated a policy for determining the amount of remuneration for individual Directors (excluding Directors who are Audit and Supervisory Committee Members), and granting restricted shares under this proposal is found to be in line with this policy, and also necessary and reasonable. The ratio of the upper limit of the number of shares to be issued or disposed of over a year in accordance with this proposal to the total number of issued shares (as of January 31, 2022) is 0.23% representing an insignificant dilution rate. The Board of Directors of the Company therefore judges that this proposal is appropriate. – 15 – Proposal No. 7 Determination of Amount of Performance Achievement-Based Bonus for Directors (Excluding Directors Who Are Audit and Supervisory Committee Members) The Company proposes in Proposal No. 5 to revise the annual amount of remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members) to not more than ¥200 million. With a view to offering incentives to achieve single-year performance targets to the Executive Directors among Directors (excluding Directors who are Audit and Supervisory Committee Members) (the “Eligible Directors”), separately from the aforementioned maximum amount of remuneration and that of Proposal No. 6 “Determination of Amount of Performance Achievement-Based Bonus for Directors (Excluding Directors Who Are Audit and Supervisory Committee Members),” the Company proposes to pay a performance achievement-based bonus. The annual amount of the performance achievement-based bonus to the Eligible Directors under this proposal shall not be more than ¥50 million, which is an amount deemed to be appropriate in consideration of the aforementioned purposes. Regarding the amount of performance achievement-based bonus to each Eligible Director, within a range not exceeding the above-mentioned amount, the payment criteria shall be deliberated by the Nomination and Remuneration Committee which the Company plans to establish, and the Board of Directors shall make the final decision based on the advice and recommendations of the committee. In addition, if Proposal No. 3 is approved and adopted in its original form, the number of Eligible Directors in this proposal will be three. [Reasons why it is appropriate to pay a performance achievement-based bonus] This proposal is to pay a performance achievement-based bonus to Eligible Directors with a view to offering incentives towards the achievement of single-year performance goals. At the Board of Directors meeting held on March 10, 2022, the Company formulated a policy for determining the amount of remuneration for individual Directors (excluding Directors who are Audit and Supervisory Committee Members). Payment of the performance achievement-based bonus under this proposal is found to be necessary and reasonable in line with this policy, and therefore, the Board of Directors of the Company considers that this proposal is appropriate. Opinion of the Audit and Supervisory Committee The Audit and Supervisory Committee found that the revision of the amount of remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members) in Proposal No. 5, determination of remuneration for granting share-based remuneration (restricted shares) of Directors (excluding Directors who are Audit and Supervisory Committee Members) as proposed in Proposal No. 6, and determination of amount of performance achievement-based bonus for Directors (excluding Directors who are Audit and Supervisory Committee Members) as proposed in Proposal No. 7, have reasonable grounds, respectively, and the specific amount of remuneration and other matters are deliberated and determined at the Nomination and Remuneration Committee. Therefore, the Audit and Supervisory Committee judges that detailed conditions of the specific amount, etc. are appropriate. – 16 – Reference (If Proposals No. 5, No. 6 and No. 7 are approved and adopted in their original form) Scheme of remuneration of Directors (excluding Directors who are Audit and Supervisory Committee Members) after the conclusion of this Annual General Meeting of Shareholders (i) Fixed remuneration (cash) [Within a range not exceeding the annual amount of ¥200 million] Fixed remuneration shall be granted on a monthly basis within a range of remuneration by corporate rank, after giving consideration to individual performance. Granting of monthly fixed remuneration shall be deliberated by the Nomination and Remuneration Committee, and, based on the committee’s advice and recommendations, determined by the Board of Directors. [Within a range not exceeding the annual amount of ¥50 million] *To be granted to Executive Directors only. (ii) Share-based remuneration (restricted shares) Restricted shares equivalent to a specific amount shall be granted to Eligible Directors according to their corporate rank. The number of restricted shares to be granted to individual Eligible Directors shall be deliberated by the Nomination and Remuneration Committee, and, based on the committee’s advice and recommendations, determined by the Board of Directors. [Within a range not exceeding the annual amount of ¥50 million] *To be granted to Executive Directors only. Monetary bonus shall be paid upon the achievement of single-year performance targets. Payment criteria for bonus shall be deliberated by the Nomination and Remuneration Committee in advance, and, based on the committee’s advice and recommendations, determined by the Board of Directors. Eligible Executive Directors shall receive an amount within a range from 0 to 200% of monthly fixed remuneration depending on their performance achievement. (iii) Performance achievement-based bonus (cash) [Outline] Fixed remuneration (cash) Share-based remuneration (Restricted shares) + Annually determined within “a range of remuneration” depending on corporate rank, after giving consideration to individual performance Shares equivalent to a specified amount according to corporate rank are granted annually. (Lifting of the transfer restriction at retirement) * The outline above may not present the actual ratio for each remuneration. Paid only when performance targets are achieved. Performance achievement-based bonus (cash) Determined within a ratio of 0 to 200% of the amount of monthly fixed remuneration according to single-year performance * If Proposal No. 2 is approved and adopted in its original form, the Company plans to introduce an Executive Officer system and pay share-based remuneration (restricted shares) and performance achievement-based bonus to Executive Officers of the Company. * “Policy for determining the amount of remuneration for individual Directors (excluding Directors who are Audit and Supervisory Committee Members)” as of the year-end is stated in the Business Report. However, at the Board of Directors meeting held on March 10, 2022, the Company resolved to revise the policy as follows: This revision will come into effect from April 27, 2022. – 17 – “Policy for determining the amount of remuneration of individual Directors (excluding Directors who are Audit and Supervisory Committee Members)” Remuneration of individual Directors (excluding non-Executive Directors) is comprised of three kinds, namely fixed remuneration, restricted share-based remuneration, and performance achievement-based bonus. As a measure to ensure the authority to determine the amount of individual remuneration is exercised appropriately, the policy for determining the amount shall be determined based on the concept and procedures below. Fixed remuneration shall, in accordance with the “Internal Rules Concerning the Criteria for Remuneration of Directors and Executive Corporate Officers Who Are Not Audit and Supervisory Committee Members” set forth in consideration of the balance between generally accepted criteria and employee salaries, among others, taking into consideration individual duties and performance, etc. within a range of remuneration according to corporate rank, be deliberated at the Nomination and Remuneration Committee with a majority of independent outside Directors, and, based on the committee’s advice and recommendation, proposed to and determined by the Board of Directors. Restricted share-based remuneration shall be granted with a view to offering incentives towards a sustainable increase in the corporate value of the Company, while promoting further sharing of value with shareholders. The terms of the scheme as to the timing and the allocation shall be deliberated by the Nomination and Remuneration Committee, and, based on the committee’s advice and recommendations, proposed to and determined by the Board of Directors. Performance achievement-based bonus, designed to offer incentives towards the achievement of single-year performance targets, shall be deliberated by the Nomination and Remuneration Committee and, based on the committee’s advice and recommendations, the terms shall be determined based on the payment criteria proposed to and determined by the Board of Directors. Remuneration of non-Executive Directors (excluding Directors who are Audit and Supervisory Committee Members) shall be entirely comprised of cash-based fixed remuneration in light of the nature of their duties. Individual fixed remuneration shall be paid in equal monthly installments in cash. – 18 –