May 13, 2022

For Immediate Release
Ryosan Company, Limited
Representative: Kazuhiko Inaba
Representative Director, President
Listing Code No.: 8140
Listing: Prime Market, Tokyo Stock Exchange
Inquiries: Norihiko Takahashi
Executive Officer
General Manager, Corporate Planning
Headquarters
TEL: +81-3-3862-3816

Notice Concerning Introduction of a Performance-Based Stock Remuneration
System for Officers
At the meeting of the Board of Directors convened today, Ryosan Company, Limited (“the Company”) resolved
to introduce a performance-based stock remuneration system (hereinafter “the System”), using a trust, for theCompany’s Directors (here and hereinafter, “Directors” does not include Directors who are Audit andSupervisory Committee Members or Outside Directors). The agenda item regarding introduction of the System
will be proposed at the 66th Ordinary General Shareholders’ Meeting, scheduled for June 24, 2022 (hereinafter“the GSM”). The Company hereby provides notice of the agenda item as follows.

1. Introduction of the System
The remuneration of the Directors of the Company consists of two components: fixed remuneration andperformance-based remuneration. At this time the Company wishes to introduce a new system thatincorporates performance-based remuneration using stock.
The System aims to clarify further the interconnectedness of Directors’ remuneration, the Company’sbusiness results and share value. It is hoped that, by ensuring that Directors share with shareholders thebenefits and risks of fluctuations in the share price, Directors will be made more fully aware of theircontributions to the improvement of business results and expansion of corporate value over themedium-to-long term. Moreover, in principle the degree to which Directors can transfer the shares issued tothem before their retirement is limited. This measure is aimed at incentivizing Directors to strive towardsustainable improvement in corporate value even after their shares have been issued to them.
With the introduction of the System, the remuneration of the Directors of the Company will consist of
three components: fixed remuneration, performance-based remuneration and, under the System, stock-basedremuneration.
The introduction of the System is conditional on the approval of the GSM.

1

If the GSM approves the introduction of the System, the Company plans to introduce a performance-based
stock remuneration system for Executive Officers who have concluded mandate agreements with theCompany (hereinafter “Executive Officers”), similar to the System for Directors.
2. Overview of the System(1) Structure of the System
In the System, which is a performance-based stock remuneration system, a trust created using money
contributed by the Company (hereinafter “the Trust”) acquires common shares of the Company (hereinafter“Company Shares”). The Company awards a number of points to each Director based on performance.
Through the Trust, the Company issues to each Director the number of Company Shares that corresponds tothe number of points awarded to that Director. (However, as discussed in 3 below, the Company concludes
with each Director a transfer restriction agreement that restricts Directors’ ability to transfer said CompanyShares.)
Company Shares will be issued based on the System to Directors in office during the two-business-year
period comprising the business year ending March 31, 2023 and the business year ending March 31, 2024
(hereinafter “the Applicable Period”). Please note, however, that the period in which Directors can receive
issuance of Company Shares is in principle restricted to a specific period of each business year during thetrust period.
Overview of the Structure of the SystemConsignorThe Company2) Establishment of trust (third-party benefit trust)(Entrustment of money)3)’ Purchase price3) PaymentConsignee
3) Disbursement oftreasury shares
5) Awarding ofpoints

1) Formulation of rules
for issuance of shares
7) Conclusion of transfer
restriction agreement

Stock exchange

Sumitomo Mitsui Trust Bank, Ltd.

3)’ Purchase of shares

Trust re-consignee: Custody Bank of Japan, Ltd.

Share issuance trustMoneyCompany Shares

4) Instruction not toexercise voting rights

6) Shares

Trustee
Beneficiaries

Directors
1) The Company formulates rules for issuance of shares to Directors.
2) The Company establishes a share issuance trust (third-party benefit trust; hereinafter “the Trust”) with theDirectors who acquire beneficial rights in the Trust as the beneficiaries, as described in 6) below. At thistime the Company entrusts to the consignee an amount of money equivalent to the funds for acquisition ofshares (however, the amount of the funds for acquisition of shares for issuance to Directors is limited to theamount approved by the General Shareholders’ Meeting).
3) The consignee acquires in a single transaction the number of Company Shares equivalent to the number ofCompany Shares expected to be issued (by receiving disbursement of treasury shares and/or by acquiring
the Company Shares from the stock exchange (including off-floor transactions)).
4) A trustee (someone who is independent of the Company and its officers) is appointed to protect the interestsof the beneficiaries to whom the rules for issuance of shares apply and to supervise the consignee,throughout the trust period. The trustee instructs the consignees not to exercise their voting rights with2

respect to the Company Shares in the Trust. Based on this instruction, the consignees do not exercise theirvoting rights at any time during the trust period.
5) Based on the rules for issuance of shares, the Company awards points to the Directors.
6) Directors who satisfy the requirements (including conclusion of the transfer restriction agreement describedin 7) below) stipulated in the trust agreement with respect to the rules for issuance of shares and the Trust
acquire beneficial rights in the Trust and, as beneficiaries of the Trust, receive from the consignee Company
Shares equivalent to the points awarded.
7) The Company and the Directors conclude a transfer restriction agreement with respect to the Company
Shares issued. This agreement establishes the period from the date the shares are issued to the date theDirector retires as a period of restriction on transfer of Company Shares. When the Director retires, theCompany releases the Director from the restriction on transfer of the issued Company Shares (CompanyShares that are not released from the restriction on transfer are reacquired by the Company withoutcompensation).
When the Trust is wrapped up, any Company Shares remaining in the residual assets of the Trust arereacquired by the Company without compensation and are subsequently expected to be cancelled byresolution of the Board of Directors.
The consignee in the System, Sumitomo Mitsui Trust Bank, Ltd., entrusts management of the trust
assets to Custody Bank of Japan, Ltd., which serves as the Trust’s re-consignee.
(2) Establishment of trusts
Assuming that the GSM approves the introduction of the System, the Company will establish the Trust bycontributing the funds necessary for the Trust to acquire in advance for a certain period the number ofCompany Shares reasonably expected to be required for issuance in accordance with (6) below. As describedin (5) below, the Trust uses the funds contributed by the Company as capital to acquire the Company Shares.
The consignee of the System, Sumitomo Mitsui Trust Bank, entrusts management of the trust assets toCustody Bank of Japan, which serves as the Trust’s re-consignee.
(3) Trust period
The trust period is a period of about two years, from August 2022 to August 2024 (both dates tentative).
However, the trust period can be extended as described in (4) below.
(4) Upper limit on trust funds that can be contributed to the Trust as funds for purchasing Company Shares
During the Applicable Period, the Company will contribute money to an upper limit of 80 million yen intotal as funds for the acquisition of the Company Shares necessary to issue Company Shares through theSystem as remuneration to serving Directors during the Applicable Period, establishing the Trust withDirectors who satisfy certain conditions as the beneficiaries. Using the money entrusted to it by theCompany as capital, the Trust acquires Company Shares, either through disbursement of treasury sharesfrom the Company or by purchasing them on the stock market (including off-floor transactions).
Note: The money actually entrusted to the Trust by the Company includes not only funds for theacquisition of the Company Shares necessary to issue Company Shares to Directors through theSystem but also the expected amount for necessary expenses such as trust and trustee
remuneration.
The Company may, by resolution of the Board of Directors at any time, stipulate an extension to theApplicable Period by a period of no more than five business years, extending in tandem the trust period of
the Trust (here and hereinafter, such extension includes effective extension of the trust period by transferring3

the trust assets of the Trust to another trust with the same objectives as the Trust established by theCompany), thereby continuing the System. In such cases, the Company will contribute additional money tothe Trust during the extension of the Applicable Period, to a maximum of 40 million yen multiplied by thenumber of business years of the extension of the Applicable Period. This additional money will serve as
additional funds for acquisition of the Company Shares necessary to issue Company Shares to Directors
through the System. In this way the Company will continue to award points and issue Company Shares as
described in (6) below.
(5) Method of acquisition of Company Shares by the Trust, etc.
The original acquisition of Company Shares by the Trust is expected to be conducted either throughdisbursement of treasury shares from the Company or by purchasing them on the stock market, within thescope of the upper limit on funds for acquisition of shares as described in (4) above. The details of themethods of acquisition will be decided after the GSM and disclosed.
In some cases, for example if the number of Directors is increased during the trust period, the numberof Company Shares in the Trust may be insufficient for the number of shares corresponding to the points
awarded to Directors during the trust period. In such cases, additional money may be entrusted to the Trust,
within the scope of the upper limit on trust funds as described in (4) above, for the acquisition of additionalCompany Shares.
(6) Method of calculation and upper limit of Company Shares to be issued to Directors
1) Method of awarding points to Directors, etc.
Based on the rules for issuance of shares as stipulated by the Board of Directors, on the date for awarding
points during the trust period as stipulated in the rules for issuance of shares, the Company awards points inaccordance with each Director’s position, degree of achievement of business-result targets and other metrics.
However, the upper limit on the total number of points awarded to Directors by the Company is 9,000
points per business year.
2) Issuance of Company Shares corresponding to the number of points awarded
Directors receive issuance of Company Shares corresponding to the number of points awarded as describedin 1) above, in accordance with the procedure described in 3) below. One point is redeemable for one
Company Share. However, if circumstances arise in which it would be reasonable to adjust the number ofCompany Shares issued for each point awarded, such as share splits or share mergers, the Company willconduct a reasonable adjustment in accordance with the share-split ratio, share-merger ratio, etc.
3) Issuance of Company Shares to Directors
In principle, each business year during the trust period, each Director acquires beneficial rights in the Trustand receives issuance of Company Shares from the Trust, provided said Directors have completed certain
procedures, such as concluding the transfer restriction agreement described in 3 below.
However, if the Company Shares in the Trust are settled by tender offer, such that the Company Sharesin the Trust are converted into cash, the Directors may be issued money (the amount converted) in lieu ofCompany Shares.
(7) Exercise of voting rights

4Based on the instructions of the trustee, who is independent of the Company and the Company’s officers,
none of the voting rights of the Company Shares in the Trust may be exercised. By using this method, theCompany intends to ensure neutrality of the Company's management with respect to the exercise of voting
rights in the Company Shares in the Trust..
(8) Handling of dividends
Dividends arising from the Company Shares in the Trust are received by the Trust. They are used to defray
the cost of acquisition of the Company Shares, remuneration of the consignee and other costs.
(9) Handling of the Company’s Shares and money when the Trust is wrapped up
When the Trust is wrapped up, any Company Shares remaining in the residual assets of the Trust arereacquired by the Company without compensation and are subsequently expected to be cancelled byresolution of the Board of Directors.
Also, a certain amount of the money remaining in the residual assets of the Trust when the Trust iswrapped up is expected to be donated to a specified public-service promotion corporation with which theDirectors have no conflict of interest, as stipulated in advance in the rules for issuance of shares and the trustagreement.
3. Transfer Restriction Agreement Regarding Company Shares Issued to Directors
With respect to the issuance of Company Shares as described in 2. (6) 3) above, the Company and theDirectors conclude a transfer restriction agreement that includes the details listed below.
1) A Director may not transfer, promise as collateral or otherwise dispose of Company Shares issued to said
Director by the System at any time from the date on which the Company Shares are issued to the date of theDirector’s retirement.
2) For certain causes, the Company may reacquire the Company Shares without compensation.
3) If items related to a merger agreement that makes the Company a merged company or other reorganizationof the Company are approved by the General Shareholders' Meetings, etc. and come into force, therestriction on transfer may be released at that point, in accordance with the transfer restriction agreement.
4) The transfer restriction agreement specifies details, etc. of conditions for release of transfer restrictions
established in advance by the Board of Directors of the Company.
Reference: Overview of the trust agreement with respect to the Trust
Consignor
The CompanyConsignee
Sumitomo Mitsui Trust Bank
(Trust re-consignee: Custody Bank of Japan)
Beneficiary
Directors and Executive Officers of the Company who satisfy theconditions for beneficiaries
TrusteeA third party to be nominated, who is independent of the Company andits officers
Exercise of voting rights
The voting rights of the Company Shares in the Trust may not be
exercised at any time during the trust period.
Type of trust
Trust of money other than money trust (third-party benefit trust)
Date of trust agreement
August 2022 (expected)
Trust period
From August 2022 to August 2024 (expected)
Purpose of trust
Issuance of Company Shares to beneficiaries based on the rules forissuance of shares5