ローソン（2651） – NOTICE OF THE 47th ORDINARY GENERAL MEETING OF SHAREHOLDERS

To All Shareholders with Voting Rights (TRANSLATION ONLY) Securities Code: 2651 May 2, 2022 Sadanobu Takemasu President, Representative Director Lawson, Inc. 11-2, Osaki 1-chome, Shinagawa-ku, TokyoNOTICE OF THE 47th ORDINARY GENERAL MEETING OF SHAREHOLDERS You are cordially notified that the 47th Ordinary General Meeting of Shareholders will be held as follows. If you do not attend the meeting, please exercise your voting rights using either of the methods described below after reading the attached REFERENCE DOCUMENTS FOR THE GENERAL MEETING OF SHAREHOLDERS. [Voting in Writing (by Mail)] Please indicate your approval or disapproval of the matters to be resolved on the Voting Rights Exercise Form enclosed herewith and return it so that it reaches us by 5:45 p.m. on Tuesday, May 24, 2022. [Voting by Electronic Means (Internet, etc.)] Please exercise your voting rights by 5:45 p.m. on Tuesday, May 24, 2022, after reading the attached document “Exercising Voting Rights via the Internet, etc.” 1. Date and Time: 10:00 a.m., Wednesday, May 25, 20222. Venue: Hall C, Tokyo International Forum, 5-1 Marunouchi 3-chome, Chiyoda-ku, Tokyo3. Objectives of the MeetingReports:The Business Report, the Consolidated Financial Statements and the Nonconsolidated Financial Statements for the47th Fiscal Term (from March 1, 2021, to February 28, 2022), and the related Audit ReportsMatters to Be Resolved:Proposal No. 1: Appropriation of Surplus Proposal No. 2: Partial Amendment to the Articles of Incorporation Proposal No. 3: Election of Five (5) Directors •••If you attend in person, please present the enclosed Voting Rights Exercise Form at the reception desk on arrival at the meeting.You do not need to enter your approval or disapproval in the Voting Rights Exercise Form if you will attend.If you wish to exercise your voting rights by proxy, your proxy is requested to present a document evidencing his/her proxy,such as a power of attorney, together with the Voting Rights Exercise Form in the proxy’s own name at the reception desk. (Thequalified proxy is limited to one shareholder having voting rights for this meeting as per the relevant provision in the Articlesof Incorporation.)Please note that we will not provide souvenirs for shareholders attending the General Meeting of Shareholders.BUSINESS REPORT (March 1, 2021 through February 28, 2022) (TRANSLATION ONLY) I. CURRENT STATUS OF THE CORPORATE GROUP 1. Summary of Operations (1) Business Developments and Results of Operations During the fiscal year under review, or fiscal 2021 ended February 28, 2022, we continued to take rigorous prevention measures against the infection of the novel coronavirus and responded to new normal demand by exerting concerted Group-wide efforts. Specifically, under the leadership of our Lawson Group Sweeping Transformation Executive Committee, which was launched in September 2020 to realize “Challenge 2025” formulated for 2025, the 50th anniversary of our establishment, we renovated our stores and revamped our product lineups in Domestic Convenience Store Business in response to changes in the business environment, and the whole Lawson Group endeavored to resolve medium to long-term issues for sustainable growth, acquire new revenue opportunities and foster job satisfaction. As a result, for fiscal 2021 on a consolidated basis, gross operating revenue increased to 698,371 million yen (up 4.9% from previous fiscal year), operating income increased to 47,096 million yen (up 15.2% from previous fiscal year) and ordinary income increased to 47,571 million yen (up 26.5% from previous fiscal year). Profit attributable to owners of parent increased to 17,900 million yen (up 106.0% from previous fiscal year). We also focused on improving our group-wide internal control system and addressing operating risks based on the 2021 Basic Policy for Improvement of Internal Control Systems. We will continue promoting internal control going forward. In addition, with a view to promoting the Sustainable Development Goals (SDGs) and focusing on environmental, social and governance (ESG) practices in management, we established the Lawson Group Human Rights Policy and Lawson Group Sustainability Policy in June and August 2021, respectively, and revised the Lawson Group Environmental Policy in August. Operating results by business segment were as follows. (Domestic Convenience Store Business) During the fiscal year under review, the number of new COVID-19 cases increased, resulting in a state of emergency or quasi-emergency being declared in many prefectures, while vaccinations by municipalities and workplaces progressed. During the first half of the fiscal year, legal and voluntary restrictions were imposed on a variety of social activities, but in the second half, new infection cases started decreasing in October 2021, leading to the nationwide lifting of the state of emergency or quasi-emergency, an easing of restrictions on social activities, and a recovery trend in the movement of people. However, in January 2022, the movement of people started showing a decreasing trend again due to the rapid spread of the Omicron variant. Under such circumstances, Lawson has been proceeding with store renovations in line with the business environment surrounding each store, helping them expand their merchandise assortment of frozen foods and other daily necessities to adapt to changes in customers’ lifestyles and better address customer needs. We renovated 2,636 stores in the fourth quarter, completing the refurbishment of 4,305 stores by the end of the fiscal year. Installation of the Machikado Chubo in-store kitchen service at stores also progressed, with 8,359 stores equipped with the service as of the end of February 2022. In store operation, we are striving to establish LAWSON stores as convenience stores endorsed by all our customers. To this end, we are implementing measures to achieve our three commitments, namely, to pursue compelling taste, to be considerate to people, and to be environmentally friendly. In addition to further strengthening our distinctive products that focus on taste and health, we are also working to provide heartfelt customer service in our stores, and to strictly address environmental concerns such as reducing food loss, plastic usage, and CO2 emissions, etc. We adopted an AI-based system that prompts stores to make timely discounts by providing reminders as part of our efforts to reduce food loss, conducted a pilot experiment on optimizing store delivery routes by using AI to reduce CO2 emissions, and started selling food by weight at NATURAL LAWSON stores to reduce plastic. [Store Operations] In store operations, we continued to focus on reinforcing adherence to the Three Essential Practices, which emphasizes (1) serving customers courteously; (2) offering a merchandise assortment focused on basic items with high demand; and (3) keeping our stores and communities clean. In our efforts to respond to customer needs and increase sales, we also focused on expanding our merchandise assortment to respond to changes in consumer lifestyles and values. Furthermore, we kept up our initiatives to increase the profitability of franchise 1 stores, including helping them streamline their store operation and reduce costs associated with food waste and utility expenses. (TRANSLATION ONLY) [Merchandising and Service Strategies] Sales continued to surge in fresh foods, frozen foods, daily delivered foods, room temperature Japanese/Western desserts, and alcoholic beverages, whose assortments we have been endeavoring to expand with the aim of supporting the daily lives of customers. In the frozen food range, sales strengthened as a result of expanding our merchandise assortment in phases from November 2021 by developing groundbreaking items such as frozen dessert, as well as capturing customer needs for stocking up on ingredients and ready-made dishes. In the rice range, our “Korega BENTO” box lunch series, which was revamped into a long-lasting chilled range in March 2021, continued to record steady sales throughout the fiscal year under review, and our “Kinshari Onigiri Rice Ball” series also enjoyed robust sales along with the modified regular lineup of onigiri rice balls. Our original products consecutively became huge hits, exemplified by “Nama Gateau Chocolat,” our new dessert product, and “Pari Chiki,” our new fast-food counter item, launched in September and October 2021, respectively. Partly owing to customers having fewer opportunities to go out, the Machikado Chubo in-store kitchen service enjoyed especially strong demand for items its products with established popularity including the “Thick-Sliced Sangenton Pork Cutlet Sandwich,” and items offered in collaboration with food service companies that provide delicious dishes from specialty restaurants as well as the “Local Bowl” Series that responds to regional needs. Regarding food delivery services, we started offering “Demae-can” in February 2022 in addition to the five services we already provide including Uber Eats, which was provided by Lawson for the first time in the convenience store sector. As a result, the combined number of stores listed on food delivery services reached 2,903 in 45 prefectures as of February 28, 2022. In addition, Uber Eats delivers over-the-counter (OTC) drugs sold at 71 LAWSON stores in 14 prefectures. [Breakdown of Sales by Merchandise Category at Chain Stores in Domestic Convenience Store Business] Sales (millions of yen) Percentage of total (%) Year on Year (%) 1,190,886 480,260 343,668 197,166 2,211,981 53.9 21.7 15.5 8.9 100.0 103.0 103.8 100.0 97.2 102.1 Product group Processed foods Fast foods Daily delivered foods Nonfood products Total [Store Development] In opening new stores, the Group continued to focus on developing profitable stores. During the fiscal year under review, the total number of LAWSON, NATURAL LAWSON and LAWSON STORE100 stores opened in Japan stood at 483 stores. Meanwhile, we closed a total of 303. As of the end of February 2022, the total number of domestic stores was 14,656 *1. Based on the joint business agreement concluded with POPLAR Co., Ltd. in September 2020, we converted 122 stores from its brand to the LAWSON POPLAR or LAWSON brand stores from this year. Based on the comprehensive business alliance entered into with H2O Retailing Corporation in May 2021, Lawson converted 97 station stores and convenience stores operated by asnas Co., Ltd., an H2O Retailing Corporation Group company, from “asnas” stores into LAWSON stores. In an effort to establish convenience store models catered to an aging population and a trend toward self-treatment, we are building partnerships with dispensing pharmacy and drug store chains to operate healthcare-oriented LAWSON stores that offer over-the-counter pharmaceuticals and prescription drugs, as well as a wider assortment of cosmetics and daily necessities than conventional LAWSON stores. The number of stores offering non-prescription drugs has reached 280 stores (includes 49 pharmacy LAWSON stores equipped with drug-dispensing pharmacies) as of the end of February 2022. Moreover, the number of stores offering nursing care consultation services has reached 22 as of the end of February 2022. Furthermore, we have also been expanding our chain of “in-hospital LAWSON stores,” which feature strengthened focus on medical, sanitary, nursing and rehabilitation supplies in addition to merchandise and services offered at standard convenience stores. The number of such stores has reached 337 as of the end of February 2022. Building on our expertise developed through operation of in-hospital LAWSON stores, we will continue to support the lives of all people interacting with hospitals. Our NATURAL LAWSON stores, which are popular particularly among female customers for supporting their beauty, health, and comfortable lifestyles, marked their 20th anniversary in July 2021. NATURAL 2 (TRANSLATION ONLY) LAWSON stores offer an exclusive selection of finely picked items of value, including food made with healthy ingredients and environmentally friendly detergents and cosmetics. Meanwhile, our LAWSON STORE100 stores offer high quality, safe and reliable fruits and vegetables with a focus on freshness and daily necessities, supporting customers’ daily dietary lives by helping them plan their meals. The stores are visited by customers of all ages including children and the elderly, and particularly single people and homemakers. As of the end of February 2022, we operate 136 NATURAL LAWSON stores and 669 LAWSON STORE100 stores. *1 The numbers of store openings and closings and total number of stores in Japan include stores operated by Lawson, Inc. and three equity-method affiliates, Lawson Kochi, Inc., Lawson Minamikyushu, Inc. and Lawson Okinawa, Inc. [Change in Total Number of Domestic Stores] Total stores as of February 28, 2021 Change during fiscal year Total stores as of February 28, 2022 LAWSON NATURAL LAWSON LAWSON STORE100 Total 13,654 143 679 14,476 197 (7) (10) 180 13,851 136 669 14,656 As a result, Domestic Convenience Store Business posted gross operating revenue of 424,567 million yen (up 0.5% from previous fiscal year) and segment profit of 28,396 million yen (down 1.2% from previous fiscal year). (Seijo Ishii Business) Seijo Ishii provides customers with well-selected, safe, and reliable foods under its philosophy of “Quality food for a quality life.” Operating diverse store formats including street-side stores and stores in station buildings and commercial facilities, the supermarket chain leverages its distinguished product development expertise to offer original products and food items made in-house under the Seijo Ishii brand. The number of directly operated Seijo Ishii stores reached 169 as of the end of February 2022. Until the end of the first half of the fiscal year, street-side stores, which captured the demand that would have been fulfilled by supermarkets had it not been for the intermittent declarations of states of emergency. In the second half of the fiscal year, after the state of emergency was lifted in October 2021, sales growth slowed mainly at street-side stores primarily due to a decrease in demand from stay-at-home customers. Product wise, dishes produced in-house at our central kitchen continued to enjoy robust sales driven by a range of measures. We will continue striving to elevate the brand power of Seijo Ishii by promoting the sustainable development of products of value, effective promotional campaigns, and publicity activities as a manufacturing retailer eager to send messages out to consumers. As a result, Seijo Ishii Business posted gross operating revenue of 108,632 million yen (up 5.4% from previous fiscal year) and segment profit of 11,240 million yen (up 8.8% from previous fiscal year). (Entertainment-related Business) In our Entertainment-related Business undertaken by Lawson Entertainment, Inc., a large number of events were postponed, cancelled or restricted in terms of the number of admissions in the first half of the fiscal year as a result of the declaration of states of emergency and quasi-emergency. In the second half, however, as the states of emergency and quasi-emergency were lifted in October 2021, concerts began to be staged, which led to a recovery trend. In January 2022, a state of quasi-emergency was issued in response to the spread of the Omicron variant, adversely affecting our business environment by forcing us to cancel the scheduled sale of Go To Eat coupons and restricting the number of admission tickets for popular live events. Notwithstanding this situation, the ticket transaction value continued to display a recovery trend as a result of our concentrated efforts to secure an expanded lineup of concerts and sporting events. We are also continuing with our efforts to expand ticket transactions for online live performances, a fledgling market, while striving to further expand sales for our steady e-commerce business by putting our live commerce into full swing. In our product sales business, a total of 55 stores are in operation nationwide as of February 28, 2022. Stores are making efforts to 3 (TRANSLATION ONLY) expand earnings through a range of measures including organizing store events and selling goods at concert venues. In the first half of the fiscal year, United Cinemas Co., Ltd., an operator of cinema complexes, had been affected by the states of emergency and quasi-emergency in applicable regions, such as having to reduce seating capacity and adopt shorter operating hours, but in the second half, almost all theaters resumed their usual operating hours from October 2021, although business hours were shortened at cinemas in some regions after a state of quasi-emergency was declared in January 2022. Furthermore, the company has continued with its efforts to increase the number of visitors, such as by rolling out contents-based initiatives. As of February 28, 2022, 42 cinema complexes nationwide with 387 screens are operating. As a result, Entertainment-related Business posted gross operating revenue of 62,996 million yen (up 8.8% from previous fiscal year) and segment profit of 2,275 million yen (segment loss was 297 million yen in previous fiscal year). (Financial Services Business) With respect to our Financial Services Business, we worked to expand our network of financial institution partners and improve the Lawson Bank ATM service in our foundational ATM business. As of the end of February 2022, the number of ATMs installed nationwide reached 13,547 (up 89 from previous fiscal year) , with each ATM used 48.4 times a day on average. The total number of our financial institution partners reached 378 nationwide (up 249 from the previous fiscal year) with the addition of shinkin banks in April 2021. As of the end of February 2022, the “smartphone ATM (QR code deposit/withdrawal)”*2 service and “Immediate Account Settlement Service,”*3 had five partners and 12 partners (nine financial institutions and three other service operators), respectively. In addition to the conventional needs to withdraw cash, the use of our ATMs has been increasing, driven by the “ATM charge service,” where cash can be charged at an ATM to “au PAY,” “WebMoney Prepaid Card,” or “PayPay” mobile payment apps. Regarding LAWSON Ponta Plus credit cards issued by Lawson Bank, Inc, we are steadily expanding credit card membership by rolling out a range of promotional campaigns and strengthening promotional efforts at stores. *2 A service where customers can deposit/withdraw cash or take out/repay a credit card loan at an ATM by using a smartphone app instead of a bank card. *3 A service that allows customers to top up their mobile payment app from their account with a financial institution by harnessing the ATM network. As a result, Financial Services Business posted gross operating revenue of 33,603 million yen (up 6.4% from previous fiscal year) and segment profit of 2,962 million yen (up 69.0% from previous fiscal year). (Overseas Business) With regards to Overseas Business, the Group’s operating companies opened LAWSON stores in the People’s Republic of China, Thailand, Indonesia, the Philippines, and the United States of America (Hawaii). In the People’s Republic of China, where business is continuing to expand, the number of LAWSON stores exceeded 4,000 in September 2021, reaching 4,560 as of the end of February, up 1,216 from the end of the previous fiscal year. In addition to opening new stores through our subsidiaries, we are also launching stores by concluding mega franchise agreements with local retailers in different cities, as well as area license agreements—where partner companies serve as headquarters in designated areas and assume overall operation and development—in efforts to accelerate the expansion of business areas and the number of stores. Chongqing Lawson, Inc. and Guangdong Lawson, Inc. agreed to acquire 100% of the shares of Sichuan WOWO Supermarket Chain Management Co., Ltd. in December 2021 and Tianhong Weiwo Convenience Store (Shenzhen) Co., Ltd. in January 2022, respectively. As a result, we are seeing an expansion of our store network in China and an increased recognition of Lawson in the country, which has led to rises in the number of franchised store applicants, franchised store openings, and directly operated stores converting to franchise stores. We will work to offer our signature high-quality original products including rice and dessert items, enhance the value of the Lawson brand in China, and increase earnings. In other regions of the world, although some stores have suspended their operations in response to the spread of COVID-19, all other stores are carrying out normal operations with rigorous infection prevention measures in place, sustaining the daily lives of our customers as their most accessible store. 4 [Distribution of Lawson Brand Stores Overseas by Region] Country/Region Number of stores (as of February 28, 2021) Change during fiscal year Number of stores (as of February 28, 2022) 1,826 2,349 (TRANSLATION ONLY) China Shanghai and surrounding area (Shanghai, Zhejiang, Jiangsu) China Chongqing and surrounding area (Chongqing, Sichuan) China Liaoning (Shenyang, Dalian) China Beijing and surrounding area (Beijing, Tianjin, Hebei) China Hubei (Wuhan, etc.) China Anhui (Hefei, etc.) China Hunan (Changsha, etc.) China Hainan (Haikou, etc.) Thailand Indonesia Philippines United States of America Hawaii 523 148 134 128 85 69 52 77 26 (3) 2 － 341 327 215 441 106 65 23 140 68 67 2 489 461 343 526 175 117 100 166 65 69 2 Total 3,621 1,241 4,862 As a result, Overseas Business posted gross operating revenue of 80,039 million yen (up 30.5% from previous fiscal year) and segment profit of 2,342 million yen (up 189.4% from previous fiscal year). (Measures to pursue Sustainable Development Goals (SDGs)) With the aim of achieving a sustainable society through Lawson’s business activities based on our corporate philosophy, “Creating Happiness and Harmony in Our Communities,” we established the SDGs Committee effective March 1, 2019. We are making Group-wide efforts led by our SDGs Committee to conduct individual initiatives that solve social issues through our business activities. Furthermore, on March 1, 2021 the position of Chief Sustainability Officer (CSO) was assumed by the president and CEO and representative director to further strengthen our initiatives. Specifically, we identified issues having significant impacts on the environment, society and economy across our business activities including our value chains, identified social issues that should be prioritized, and uphold them as our six material issues (materiality). Lawson’s “Six Material Issues” 1. Providing safety/security-oriented overwhelmingly high value-added products and services friendly to society and the environment 2. Supporting health promotion for all people through products and stores 3. Providing comfortable work environment leading to job satisfaction 4. Supporting women, senior people as well as children’s growth 5. Coexisting synergistically with communities by serving as part of social infrastructure 6. Sustainable environment preservation activities toward carbon-free society We are especially making focused efforts on addressing our sixth material issue, “sustainable environment preservation activities toward carbon-free society,” by setting social and environmental key performance indicators (KPIs) as Goals for 2030 in three areas: (1) reducing CO2 emissions; (2) reducing food waste; and (3) reducing plastic use (for containers, packaging and shopping bags). Furthermore, toward Lawson’s Vision 2050, we are taking on difficult challenges to achieve high goals so that we can create a carbon-free society and contribute more to the ideal world that the SDGs aim to realize. To fulfill Lawson’s Vision 2050, we are looking back on what we have done so far and examining and discussing what we should do now to steadily proceed with our material issues and KPIs for 2030. 5 (TRANSLATION ONLY) Issues KPIs for 2030 KPIs for 2050 Reducing CO2 emissions Reduce by 100% CO2 emissions per store Reduce by 50% over 2013 (Target revised upward in June 2021) Reduce by 50% over 2018 Reducing food waste Reduce by 100% Reducing plastic use (for containers and packaging) Reduce by 30% over 2017 (50% of materials used for Lawson’s original product containers and packaging are eco-friendly) (100% of materials used for Lawson’s original product containers and packaging are eco-friendly) Reducing plastic use (Plastic shopping bags) Plastic shopping bags Reduce by 100% ― To reduce CO2 emissions, we will start using solar-derived renewable energy in the fiscal year ending February 2023 at approximately 3,600 stores in the Kanto Koshinetsu region and Gifu, Shizuoka, Aichi and Mie prefectures in collaboration with Mitsubishi Corporation. This will lead to an annual CO2 emissions reduction of about 19,000 tons. Moreover, Lawson, Inc. endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in April 2020. To combat worsening climate change issues, we analyze climate-related risks and opportunities and have been disclosing the results on our official website since December 2020. We will identify impact on our business strategies, examine measures to take, and endeavor to proactively disclose information. To reduce food waste, we strive to optimize the number of purchases and offer discounts at stores to sell out all stock by utilizing AI, and reduce unsold leftovers by selling special feature items on a reservation basis. In addition, we also seek to develop more bento box lunches and ready-made dishes with longer shelf lives and expand our frozen foods lineup, while reducing waste by introducing the Machikado Chubo in-store kitchen service at more stores. To reduce plastic use, we have replaced the plastic cups used for iced coffee and café latte offered at “MACHI café” with paper cups. We started using paper containers for our bento box lunches and cooked noodles, and have adopted thinner plastics and environmentally friendly materials. At about 10 NATURAL LAWSON and LAWSON stores, we sell detergents and dried fruit and nuts by weight, and are looking to expand this sales format. In July 2021, we embarked on a pilot experiment at a store in Yokohama City with the aim of promoting the recycling of used plastic bottles in partnerships with Kirin Holdings Company, Limited and Kirin Beverage Company, Limited by using their infrastructure. Furthermore, timed with the enforcement of the Plastic Resource Circulation Act in April 2022, we will start introducing in phases from April 1 shorter plastic spoons and forks with an opening in the handle, which is expected to reduce plastic by approximately 67 tons. Additionally, we implemented the following initiatives during the fiscal year under review in relation to SDGs. In the area of education for children, we continued with our scholarship program for children from single-parent families, selecting 400 students to receive scholarships in fiscal 2021. Furthermore, in the second half of the fiscal year, we offered special in-hospital classes for children at university hospitals in three prefectures. Since August 2019, Lawson has periodically donated original dessert products and processed foods that missed their store delivery deadlines (but were still well within their best-before dates) to the Japan Food Bank Promotion Group and Kodomo Takushoku Oendan, a charity organization that delivers food to children. The donated products are delivered to various bodies across Japan, which then provide them to families who need food aid, children’s cafeterias, orphanages, facilities for people with disabilities, etc. In fiscal 2021, we donated a total of some 270,000 items (about 30 tons) of food products, including Lawson’s original items and national-label products developed exclusively for Lawson. While working to take protective measures against the spread of COVID-19 at our stores, we have also conducted various initiatives to support people who are forced to persevere amid difficult situations in their 6 (TRANSLATION ONLY) day-to-day lives. In our efforts to support medical professionals and care managers, we offered a complimentary s-size MACHI café coffee to each registered member of a website dedicated to medical professionals and a website dedicated to care managers in May/June and August 2021, respectively. In December 2021, we presented a gift of some 900 Christmas cakes to students and other people in need of support amid the pandemic, as well as 282 sets of New Year’s osechi meals to 846 medical professionals and children requiring support. Furthermore, December 31 and January 1, 2022, we sold “Hot Milk” at 65 yen including tax, half the regular price, to raise demand for milk, which had been suffering a delayed recovery in demand owing to the pandemic and reduced consumption due to schools closing for the winter holiday when no lunches are served. The initiative was extremely popular. We intend to continue providing support to people who are negatively affected by the spread of COVID-19. (2) Capital Expenditures Capital expenditures of the Group during the fiscal year under review totaled 44,991 million yen, of which 33,263 million yen was primarily for store facility investment in buildings, and 8,082 million yen was for the upgrading of information systems. (3) Changes in Operating Results and Financial Position ① Changes in Operating Results and Financial Position of the Corporate Group Category/Fiscal Term Gross operating revenue (millions of yen) Ordinary income (millions of yen) Profit attributable to owners of parent (millions of yen) Profit per share (yen) Fiscal 2018 44th Term Fiscal 2019 45th Term Fiscal 2020 46th Term Fiscal 2021 47th Term 700,647 730,236 666,001 698,371 57,700 56,346 37,610 47,571 25,585 20,108 255.71 200.95 8,689 86.84 17,900 178.87 Total assets (millions of yen) 1,342,329 1,357,732 1,365,430 1,337,245 Net assets (millions of yen) 281,982 275,347 272,931 278,473 Net assets per share (yen) 2,763.54 2,707.08 2,674.53 2,726.97 Note: Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28; February 16, 2018), etc. have been applied from the beginning of the fiscal year ended February 29, 2020 in preparing the consolidated financial statements. The standards have been retrospectively applied to the consolidated financial statements for the previous fiscal year. ② Changes in Operating Results and Financial Position of the Company Category/Fiscal Term Net sales of all convenience stores (millions of yen) Gross operating revenue (millions of yen) Ordinary income (millions of yen) Profit (millions of yen) Profit per share (yen) Total assets (millions of yen) Net assets (millions of yen) Net assets per share (yen) Fiscal 2018 44th Term Fiscal 2019 45th Term Fiscal 2020 46th Term Fiscal 2021 47th Term 2,236,125 2,296,156 2,165,818 2,211,981 385,678 390,811 354,825 355,102 51,443 31,002 309.85 838,260 240,280 45,962 15,486 154.76 858,770 233,705 33,700 15,894 158.84 839,426 234,977 34,278 13,470 134.61 793,925 233,294 2,399.24 2,333.04 2,344.86 2,327.59 7 (TRANSLATION ONLY) (4) Priority Issues of the Group ① Response to social issues The Company promotes ESG-focused management, and the SDGs Committee is clarifying the items and issues to be addressed by the Lawson Group with the aim of ensuring that the Group can work toward resolving issues. In particular, the Group is focused on promoting decarbonization activities, reducing food waste, and eliminating plastics in order to help bring about a sustainable society. ② Continue to ensure stable management of franchised stores The Company recognizes that maintaining the stable management of franchised stores is an important issue. Based on franchise store profit-focused management, we are developing a system in which our headquarters takes responsibility for providing comprehensive support to franchise stores in response to soaring store expenses and labor shortages. In addition, we will make the maximum use of digital technology to simplify store operation, increase efficiency, make working environments more pleasant, and reduce labor needs to develop an environment that enables people of all ages and nationalities to work at our stores, while addressing issues faced by franchised stores such as the shortage of store crew. Furthermore, we will implement short-term and medium- to long-term initiatives such as measures to stabilize management by promoting the management of multiple franchised stores as well as measures to enable new franchised store owners to start their business with peace of mind while addressing shortages of FC store owners stemming from the declining birthrate, thereby building stronger partnerships with franchised stores. ③ Pursuit of an ideal store format with enhanced product appeal and product assortment By setting out and thoroughly implementing the Three Lawson Promises of “Superior taste,” “Human kindness,” and “Environmental (Machi) friendliness,” we aim to further strengthen our product appeal and create stores that match the various lifestyles and needs of our customers. By promoting store renovations to pursue the ideal store format based on the above, we strive to create stores that generate word-of-mouth recommendations by customers. In addition, in order to deeply understand customer needs that vary by area and respond to such needs, we will shift to a system in which we formulate and implement sales, product, and store development strategies in each area. ④ Take on challenges in future growth areas We will continue to take on challenges to establish new business models in future growth areas not only in our domestic convenience store business, the core business of the Group, but also in various other fields such as Seijo Ishii Business, Entertainment-related Business, Financial Services Business, and Overseas Business. We will also work hard to make maximum use of each Group company’s distinctive features to generate synergistic effects. For such purposes, we will utilize advanced digital technologies as well as management resources such as real stores and customer bases, etc. held by the Group. ⑤ Promote internal control systems and address operating risks We believe that enhancing internal control across the Group as a whole and dealing with business risks are absolutely necessary to develop our business on a continual basis. Proactive efforts in corporate governance as an enterprise listed on the prime market that will enable us to meet the expectations of all stakeholders involved with our Group will help improve our corporate value. We will continue focusing our efforts on enhancing internal control and addressing business risks. The Company has a listed parent company (Mitsubishi Corporation) and, although we are publicly listed as a parent/subsidiary pair, we appoint one-third or more independent directors who have no conflict of interest with general shareholders. In addition, a “Nomination and Compensation Advisory Committee” comprising only non-executive directors and non-fulltime outside Audit and Supervisory Board members, the majority of which are independent executives, has been voluntarily established to deliberate on executive compensation and candidates for representative director/director positions and to advise the Board of Directors, constituting a system able to ensure the highest levels of management transparency and fairness. We conduct business activities under our corporate philosophy, “Creating Happiness and Harmony in Our Communities”. We continue to make companywide efforts to “master the basics”, “respond to changes” and “meet the challenge of further growth.” We look forward to the continued support and encouragement of our shareholders. 8 2. Current Status at the End of February 2022 (1) Major Business Segments of the Corporate Group and Principal Offices (Domestic Convenience Store Business) ① Lawson, Inc. (TRANSLATION ONLY) Major Business: Primarily operates the Lawson-brand franchise system and undertakes management of company-operated stores as the head office of LAWSON, NATURAL LAWSON and LAWSON STORE100 convenience store chains. Shinagawa-ku, Tokyo Head Office: Principal Offices: Hokkaido area office (Kita-ku, Sapporo), Tohoku area office (Aoba-ku, Sendai), Kanto area office (Minato-ku, Tokyo), Chubu area office (Naka-ku, Nagoya), Kinki area office (Suita city, Osaka), Chushikoku area office (Kita-ku, Okayama) and Kyushu area office (Hakata-ku, Fukuoka) Note: In addition to the above sites, the Company has 118 offices throughout Japan, ② Lawson urbanworks, Inc. including branches. Major Business: Head Office: Operates LAWSON stores mainly in Tokyo and Chiba prefectures. Shinagawa-ku, Tokyo ③ Lawson Store100, Inc. Major Business: Head Office: ④ SCI, Inc. Major Business: Head Office: Operates LAWSON STORE100 stores, provides guidance, and engages in merchandise-related businesses. Saiwai-ku, Kawasaki-shi, Kanagawa Food wholesaler, including processed meats and frozen foods, and wholesaler of packing materials. Shinagawa-ku, Tokyo [Stores] Prefecture Hokkaido Aomori Akita Iwate Miyagi Yamagata Fukushima Niigata Tochigi Gunma Number of stores Number of stores Prefecture Prefecture Prefecture Number of stores Number of stores 675 Ibaraki Tokyo 279 182 Kanagawa Shizuoka 178 255 Yamanashi 112 Nagano 170 Aichi 226 Gifu 197 Mie 244 Ishikawa 217 Kyoto Shiga 1,683 1,077 Nara 275 Wakayama 137 Osaka 174 Hyogo 717 Okayama 181 Hiroshima 136 Yamaguchi 103 Tottori 329 Ehime Tokushima 154 138 Kochi 153 Fukuoka 1,175 Saga 698 Nagasaki 235 Oita 297 Kumamoto 127 Miyazaki 136 Kagoshima 141 Okinawa 212 135 138 529 75 125 197 161 109 202 Saitama Chiba 692 181 107 Kagawa Note: These figures include stores operated by Lawson, Inc., and three equity-method affiliates, Lawson Kochi, Inc., Total (domestic) Fukui 600 132 14,656 260 Shimane Toyama Lawson Minamikyushu, Inc. and Lawson Okinawa, Inc. 9 (Seijo Ishii Business) SEIJO ISHII CO., LTD. Major Business: Head Office: (Entertainment-related Business) ① Lawson Entertainment, Inc. Major Business: Head Office: ② United Cinemas Co., Ltd. (TRANSLATION ONLY) Operates a chain of small supermarkets that seeks to develop and manufacture high-value-added products. Setagaya-ku, Tokyo Sells tickets for various events and music/video software inside LAWSON stores and others. Shinagawa-ku, Tokyo Major Business: Manages multiplex movie theaters Head Office: Shinagawa-ku, Tokyo (Financial Services Business) Lawson Bank, Inc. Major Business: Operates a banking business Head Office: Shinagawa-ku, Tokyo (Overseas Business) ① Lawson (China) Holdings, Inc. Major Business: Head Office: Controls companies that operate overseas business in China. Shanghai, China ② Shanghai Lawson, Inc. Major Business: Head Office: ③ Shanghai Le Song Trading Co., Ltd. Operates Company-operated convenience stores and franchise stores. Shanghai, China Major Business: Head Office: Operates Company-operated convenience stores. Shanghai, China ④ Shang Hai Gong Hui Trading Co., Ltd Major Business: Head Office: Operates Company-operated convenience stores and franchise stores. Shanghai, China ⑤ Zhejiang Lawson, Inc. Major Business: Head Office: ⑥ Chongqing Lawson, Inc. Major Business: Head Office: ⑦ Dalian Lawson, Inc. Major Business: Head Office: ⑧ Beijing Lawson, Inc. Major Business: Head Office: Operates Company-operated convenience stores and franchise stores. Hangzhou, China Operates Company-operated convenience stores and franchise stores. Chongqing, China Operates Company-operated convenience stores and franchise stores. Dalian, China Operates Company-operated convenience stores and franchise stores. Beijing, China ⑨ BEIJING LUOSONG Co., Ltd. Major Business: Head Office: Operates Company-operated convenience stores. Beijing, China Operates stores under the store brand of LAWSON 108 and 108SHOP. Bangkok, Thailand ⑩ Saha Lawson Co., Ltd. Major Business: Head Office: (Other Business) ・Consulting Business BestPractice, Inc. Major Business: Conducts surveys of convenience stores to give advice and make specific proposals Head Office: for the improvement of LAWSON stores. Shinagawa-ku, Tokyo 10 Name of Business Segment Number of Employees Year-on-Year Change (2) Employees ① Employees of the Corporate Group Domestic Convenience Store Business Seijo Ishii Business Entertainment-related Business Financial Services Business Overseas Business Other Business Total (TRANSLATION ONLY) 5,218 1,294 1,152 169 2,393 136 10,362 (156) 77 (26) 4 84 (6) (23) Note: Number of employees is full-time employees. ② Employees of the Company Number of Employees Note: Number of employees is full-time employees. Year-on-Year Change Average Age Average Years of Service 4,617 (135) 41.3 14.3 (3) Major Lenders Lenders Syndicated loan Mitsubishi Corporation Financial & Management Services (Japan) Ltd. Mizuho Bank, Ltd Sumitomo Mitsui Banking Corporation Amount Borrowed (millions of yen) 130,000 52,062 19,000 15,000 (4) Parent Company and Significant Subsidiaries and Equity-method Associates ① Parent Company Parent Company Capital Stock (millions of yen) Shareholding (%) Major Business Mitsubishi Corporation 204,446 50.2 Natural Gas, Industrial Materials, Petroleum & Chemicals Solution, Mineral Resources, Industrial Infrastructure, Automotive & Mobility, Food Industry, Consumer Industry, Power Solution, Urban Development, etc. • Relationship with parent company Mitsubishi Corporation, our parent company, holds 50,150,000 of our shares (50.2% of voting rights). Mitsubishi Corporation provides guarantees for loans payable and engages in other transactions with the Lawson Group. • Information on transactions with the parent company: a. Ensuring that engaging in these transactions is not harmful to our interests We have entered into guarantee entrustment agreements with our parent company, and we have paid our parent company guarantee fees for some of our loans payable based on these agreements. In conducting these transactions, we have established transaction conditions that compare with prevailing market prices, as we do for general transactions. b. Board of Directors’ assessment on whether these transactions are harmful to our interests, and grounds for that assessment Given the perspective in a. above, we solicit appropriate feedback on our management at Board of Directors’ meetings attended by outside directors and outside Audit and Supervisory Board members, with decisions made after multi-faceted discussions, and we have determined that such transactions are not harmful to our interests. c. Views of outside directors if they differ from the Board of Directors’ assessment 11 (TRANSLATION ONLY) Not applicable. • The following outlines the agreements, etc. that the Company has concluded with its parent company with regard to significant financial and business policies: The Company resolved at its Board of Directors’ meeting held on September 16, 2016 to amend the business alliance agreement that the Company had concluded with Mitsubishi Corporation in February 2000 (including amendments thereto; hereinafter, the “Original Business Alliance Agreement”) and on the same day concluded the business alliance agreement (which came into effect on February 15, 2017). a. Reason for amendment of the Original Business Alliance Agreement The Company and Mitsubishi Corporation concluded that it was necessary to further strengthen their collaboration and further bolster the Company’s business foundation by enabling the Company to take even greater advantage of Mitsubishi Corporation’s network and human resources for the benefit of the Company’s domestic convenience store business, overseas convenience store business, and other peripheral businesses through making the Company a consolidated subsidiary of Mitsubishi Corporation. b. Details of amendments to the Original Business Alliance Agreement (a) The fields of business alliance will be as follows: (i) domestic convenience store business, (ii) overseas convenience store business, (iii) peripheral businesses, and (iv) other businesses separately agreed on by the companies; (b) Mitsubishi Corporation will implement the business alliance while respecting the Company’s management independence and identity, as well as respecting the interests of the franchise stores, which constitute the essence of the franchise business; (c) In order to effectively and substantially promote the business alliance, Mitsubishi Corporation will dispatch personnel as necessary upon mutual consultation, and the Company will accept such dispatched personnel; and (d) The amended business alliance agreement will become effective on the settlement commencement date of the tender offer for shares of the Company’s common stock by Mitsubishi Corporation announced on September 16, 2016 and will remain effective until a time separately agreed to in writing by Mitsubishi Corporation and the Company. 12 10 99 10 100 100 100 100 100 ② Significant Subsidiaries Company Name Lawson urbanworks, Inc. Capital Stock Shareholding million yen 100.0 % Lawson Store100, Inc. million yen 100.0 % SCI, Inc. million yen 100.0 % (TRANSLATION ONLY) Major Business Domestic Convenience Store Business Domestic Convenience Store Business Domestic Convenience Store Business SEIJO ISHII CO., LTD. million yen 100.0 % Seijo Ishii Business Lawson Entertainment, Inc. million yen 100.0 % Lawson HMV Entertainment United Cinema Holdings, Inc. United Entertainment Holdings Co., Ltd. million yen 100.0 % million yen 100.0 % United Cinemas Co., Ltd. million yen 100.0 % Lawson Bank, Inc. 11,600 million yen 95.0% Entertainment-related Business Entertainment-related Business Entertainment-related Business Entertainment-related Business Financial Services Business Lawson (China) Holdings, Inc. 3,359 million Chinese yuan 100.0 % Overseas Business Shanghai Lawson, Inc. 452 million Chinese yuan 100.0 % Overseas Business Shanghai Le Song Trading Co., Ltd. 0.1 million Chinese yuan 100.0 % Overseas Business Shang Hai Gong Hui Trading Co., Ltd. 0.3 million Chinese yuan 85.0 % Overseas Business Zhejiang Lawson, Inc. 10 million Chinese yuan 100.0 % Overseas Business Chongqing Lawson, Inc. 240 million Chinese yuan 100.0 % Overseas Business Dalian Lawson, Inc. 66 million Chinese yuan 98.3 % Overseas Business Beijing Lawson, Inc. 284 million Chinese yuan 64.8 % Overseas Business BEIJING LUOSONG Co., Ltd. 0.1 million Chinese yuan 64.8 % Overseas Business Saha Lawson Co., Ltd. 1,367 million baht 49.2 % Overseas Business 10 million yen 100.0 % Consulting Business BestPractice, Inc. Notes: 1. Shareholding includes indirectly held shares. ③ Significant Equity-method Associates Company Name Lawson Okinawa, Inc. Lawson Minamikyushu, Inc. Lawson Kochi, Inc. Capital Stock (millions of yen) Shareholding (%) Major Business 10 100 50 49.0 49.0 49.0 Domestic Convenience Store Business Domestic Convenience Store Business Domestic Convenience Store Business 13 (TRANSLATION ONLY) II. CURRENT STATUS OF THE COMPANY 1. Shares at the End of the Year (1) Total Number of Shares Authorized to Be Issued: (2) Total Number of Shares Issued and Outstanding: 409,300,000 shares 100,300,000 shares (Including 228,807 shares of treasury shares) (3) Number of Unit (tangen) Shares: (4) Number of Shareholders: (5) Top 10 Major Shareholders: 100 shares 31,941 Shareholder’s Name Number of Shares Held (thousand shares) Shareholding (%) Mitsubishi Corporation 50,150 50.1 The Master Trust Bank of Japan, Ltd. (Trust account) 7,176 Custody Bank of Japan, Ltd. (Trust account) KDDI CORPORATION NTT DOCOMO, INC. Japan Securities Finance Co., Ltd. STATE STREET BANK WEST CLIENT － TREATY 505234 Employee stockholding association BNYM TREATY DTT 15 SMBC Nikko Securities Inc. Notes: 1. The number of shares held in the above table is based on the register of shareholders. 2. The equity position in the above table is calculated after deducting treasury shares. 7.2 2.2 2.1 2.1 1.5 1.5 0.9 0.9 0.8 2,174 2,110 2,092 1,522 1,456 877 869 797 14 (TRANSLATION ONLY) 2. Status of Stock Acquisition Rights (1) Stock Acquisition Rights Held by Corporate Officers of the Company as of February 28, 2022 14th Stock Acquisition Rights 16th Stock Acquisition Rights 17th Stock Acquisition Rights 19th Stock Acquisition Rights Directors (excluding Outside Directors) Number of option holders and the number of stock acquisition rights (units) 1 person (27 unit) 0 person (0 units) Common stock of Lawson, Inc. 2,700 1 person (38 units) 0 person (0 units) Common stock of Lawson, Inc. 3,800 1 person (62 units) 1 person (5 units) Common stock of Lawson, Inc. 6,700 Outside Directors 3 persons (91 units) 1 person (5 units) Common stock of Lawson, Inc. 9,600 1 yen 1 yen 1 yen 1 yen April 10, 2015 through March 24, 2035 May 2, 2016 through April 12, 2036 May 1, 2017 through April 11, 2037 June 8, 2018 through May 21, 2038 Note 1 Note 1 Note 1 Note 1 Class and number of shares subject to stock acquisition rights Amount of property contributed upon the exercise of the share subscription rights (per share) Exercise period Main exercise conditions 20th Stock Acquisition Rights 21st Stock Acquisition Rights 22nd Stock Acquisition Rights Number of option holders and the number of stock acquisition rights (units) Directors (excluding Outside Directors) Outside Directors Class and number of shares subject to stock acquisition rights Amount of property contributed upon the exercise of the share subscription rights (per share) Exercise period Main exercise conditions 3 persons (106 units) 2 persons (10 units) Common stock of Lawson, Inc. 11,600 June 7, 2019 through May 20, 2039 Note 1 3 persons (141 units) 2 persons (10 units) Common stock of Lawson, Inc. 15,100 1 yen June 12, 2020 through May 26, 2040 Note 1 3 persons (175 units) 3 persons (15 units) Common stock of Lawson, Inc. 19,000 June 11, 2021 through May 24, 2041 Note 1 1 yen 1 yen 15 (2) Stock Acquisition Rights Issued during the Fiscal Year to Senior Vice Presidents of the Company as Compensation for Performing Their Duties (TRANSLATION ONLY) Number of SVPs and the number of stock acquisition rights 22nd Stock Acquisition Rights 11 persons (51 units) Common stock of Lawson, Inc. 5,100 1 yen June 11, 2021 through May 24, 2041 Note 1 Senior Vice Presidents Class and number of shares subject to stock acquisition rights Amount of property contributed upon the exercise of the share subscription rights (per share) Exercise period Main exercise conditions Notes: 1. A stock acquisition rights holder may exercise his or her rights within the exercise period only for a period of 10 days from the day after losing his or her position as either director and/or executive officer of the Company. 2. “Senior Vice Presidents” exclude those who concurrently serve as a member of the board. The total number of shares subject to stock acquisition rights that remain unexercised as of February 28, 2022, is 86,000 shares, accounting for 0.09% of the total number of shares issued and outstanding. 16 3. Members of the Board and Corporate Auditors (1) Positions, Names and Assignments (As of February 28, 2022) Name Position, Assignments and Important Concurrent Positions Note: Important concurrent positions of Outside Directors given later in (6) Outside Directors and Outside Corporate Auditors (TRANSLATION ONLY) Sadanobu Takemasu Katsuyuki Imada President Representative Director, Chairman of the Board Senior Executive Managing Officer, Member of the Board CSO Senior Executive Managing Officer, – Corporate Strategy, – Human Resources, Head Director, New Business Division, Executive Assistant to Deputy CSO (CSR Promotion) CFO Executive Vice President, Group CEO, Consumer Industry Group (Concurrently) Division COO, Retail Div. Mitsubishi Corporation Satoshi Nakaniwa Keiko Hayashi Miki Iwamura Satoko Suzuki Kiyotaka Kikuchi Executive Vice President, Member of the Board Member of the Board Member of the Board Member of the Board Member of the Board Shuichi Imagawa Jun Miyazaki Eiko Tsujiyama Yuko Gomi Keiko Yoshida Notes: Audit and Supervisory Board Member (full-time) Audit and Supervisory Board Member (full-time) Audit and Supervisory Board Member Audit and Supervisory Board Member Audit and Supervisory Board Member 1. Three members of the Board (Keiko Hayashi, Miki Iwamura and Satoko Suzuki) are outside directors as stipulated in Article 2, Item 15, of the Companies Act of Japan (the “Companies Act”). 2. Three auditors (Eiko Tsujiyama, Audit and Supervisory Board Member, Yuko Gomi, Audit and Supervisory Board Member and Keiko Yoshida, Audit and Supervisory Board Member) are outside corporate auditors as stipulated in Article 2, Item 16, of the Companies Act. 3. Eiko Tsujiyama, Audit and Supervisory Board Member, has long-term experience as a university professor in accounting and therefore has considerable expertise in finance and accounting. Yuko Gomi, Audit and Supervisory Board Member, has a wealth of work experience of law and risk management mainly in relation to the legal affairs of companies, based on her viewpoint of law as a lawyer and her broad knowledge. Keiko Yoshida, Audit and Supervisory Board Member, is a certified public accountant, serving as the representative of an accounting firm, and therefore has considerable expertise in taxation, accounting and management. 4. The following personnel changes were approved at the board of corporate auditors’ meeting and the 46th general meeting of shareholders held on May 25, 2021. Appointment Member of the Board Audit and Supervisory Board (full-time) Member of the Board Member of the Board Audit and Supervisory Board (full-time) Resignation Kiyotaka Kikuchi Jun Miyazaki Yutaka Kyoya Kazunori Nishio Masakatsu Gonai 17 [Reference] Members of the Boards and Senior Vice Presidents (Excluding Non-Executive Directors) (As of March 1, 2022) (TRANSLATION ONLY) Name Sadanobu Takemasu Satoshi Nakaniwa Masakatsu Gonai Yuichi Wada Motonobu Miyake Hitoshi Fujii Akihito Watanabe Tatsushi Sato Hiroyuki Karasawa Tatsuya Murase Suguru Kawabata Kazuhiro Wakui Yasuhiko Hirokane Toshihiko Chihiro Satoshi Kumagai Miwako Tate Takeji Hino Chief Risk Officer, Division Director of Franchisee Business Support Division Position and Major Title CSO CFO President, Representative Director, Chairman of the Board Executive Vice President, Member of the Board Senior Executive Managing Officer Executive Managing Officer Company President of Kinki Company Executive Managing Officer Company President of China Company, Executive Managing Officer Division Director of Merchandising Division Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President General Manager of Lawson (China) Holdings, Inc. Lawson Entertainment, Inc., United Cinemas Co., Ltd. President and Representative Director Division Director of IT Systems Solution Division Division Director of Corporate Strategy and Planning Division Division Director of Store Sales Division Division Director of Corporate Sales and Store Development Division Merchandising Division Deputy Director Company President of Hokkaido Company SEIJO ISHII CO., LTD. Member of the Board, Senior Executive Vice President (Temporary Transfer) Company President of Financial Services Company Communication Division Director Human Resources Division Director and LAWSONWILL, Inc President and Representative Director Financial Administration Division Director Company President of Incubation Company, General Manager of Open Innovation Center Division Director of Marketing Strategy Division Corporate Sales and Store Development Division Deputy Director Store Sales Division Deputy Director General Manager of CS Promotion Office Executive Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Tomoki Takanishi Katsuaki Sakai Senior Vice President Senior Vice President Gyo Katsuta Noboru Kakiuchi Senior Vice President Senior Vice President Hiroyuki Oki Hiroko Otani Senior Vice President Senior Vice President 18 (TRANSLATION ONLY) (2) Outline of Liability Limitation Agreements The Company has entered into agreements with its directors (excluding persons who are executive directors, etc.) and corporate auditors to limit their liability with regard to the damages outlined under Article 423, Paragraph 1 of the Companies Act, whereby their liability shall be, at a maximum, the total sum of the amounts set forth in the respective relevant items of Article 425, Paragraph 1 of the Companies Act. The aforementioned liability limitation is valid only in cases where the said director or corporate auditor has performed duties which resulted in a cause of such liability in good faith without committing acts of gross negligence. (3) Outline of Indemnity Agreements The Company has entered into indemnity agreements prescribed under Article 430-2, Paragraph 1 of the Companies Act with its directors (Sadanobu Takemasu, Katsuyuki Imada, Satoshi Nakaniwa, Keiko Hayashi, Miki Iwamura, Satoko Suzuki, and Kiyotaka Kikuchi) and corporate auditors (Shuichi Imagawa, Jun Miyazaki, Eiko Tsujiyama, Yuko Gomi, and Keiko Yoshida), whereby the Company shall indemnify the expenses set forth in item (i) of the said Paragraph and the losses set forth in item (ii) of the said Paragraph within the limits prescribed by laws and regulations. In addition, the Company takes measures to prevent the impairment of appropriate execution of duties by the Company’s officers by not providing compensation in cases where loss is attributable to bad faith or gross negligence in the execution of duties, or in cases where there is a reason that exempts the insurance provider from payment as stipulated in the directors and officers (D&O) liability insurance agreements concluded between the Company and the insurer and by setting a certain amount as a deductible for losses per event. (4) Outline of Directors and Officers (D&O) Liability Insurance Agreements The Company has entered into directors and officers (D&O) liability insurance agreements prescribed under Article 430-3, Paragraph 1 of the Companies Act with an insurance provider, whereby litigation expenses and damages arising from compensation payments to be borne by the insured shall be covered by the said insurance agreements. The insured under the directors and officers (D&O) liability insurance agreements shall be directors, corporate auditors, executive officers, etc. of the Company and its subsidiaries, and all insurance premiums for the insured shall be borne by the Company. In addition, the Company takes measures to prevent the impairment of appropriate execution of duties by the Company’s officers by ensuring that the said insurance shall not be applied in cases where loss is attributable to bad faith or gross negligence in the execution of duties by the insured, or in cases where there is a reason that exempts the insurance provider from payment as stipulated in the said agreements. (5) Amounts of Remuneration Paid to Directors and Corporate Auditors Remuneration paid to officers Category Total Compensation Paid (millions of yen) Total Compensation Paid by Type (millions of yen) Fixed compensation Variable compensation Stock Options Number of Corresponding Directors and Corporate Auditors Directors (Including Outside Directors) Outside Directors Corporate Auditors (Including Outside Corporate Auditors) Outside Corporate Auditors Total 258 35 84 36 342 53 － － － 53 69 5 － － 69 9 3 6 3 15 (6) Policy on Decisions Concerning the Amount of Remuneration Paid to Directors The Company resolved the following policy on decisions concerning the amount of remuneration paid to directors at its Board of Directors’ meeting held on December 15, 2021. ① Basic policy on decisions concerning the amount of remuneration paid to directors Regarding the amount of remuneration paid to directors, it is the Company’s basic policy to design the remuneration system in close correlation with shareholder returns while ensuring that it will function sufficiently as an incentive for the enhancement of corporate value, sustainable growth and improvement of operating performance, and reward each director with a sufficient and adequate amount of compensation for 135 30 84 36 219 19 the execution of their duties. (TRANSLATION ONLY) ② Decision-making process for the amount of remuneration paid to directors In order to enhance management transparency and fairness, the amount of remuneration paid to the Company’s directors is determined through the following processes: i The limit on the amount of remuneration paid to directors is resolved at the general meeting of shareholders following the decision by the Board of Directors based on consultation with and recommendations of the Nomination and Compensation Committee. ii Directors’ remuneration system and calculation rules are determined by the Board of Directors based on consultation with and recommendations of the Nomination and Compensation Committee. The standard remuneration amount commensurate with the position is determined by the President of the Company based on consultation with and recommendations of the