Executives

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Members of the Board As of May 24, 2023

Sadanobu Takemasu

Masayuki Itonaga

Miki Iwamura

Years as a Member of the Board: 9
President and CEO, Representative Director,
Chairman of the Board, and CSO

Years as a Member of the Board: 1
Member of the Board, Executive Managing Officer, CFO

Years as a Member of the Board: 5
Member of the Board (outside)
Lead Independent Outside Director

Born in 1969; 53 years old. Appointed Senior Executive Vice
President, Representative Director in 2014. Appointed President
and CEO, and Representative Director in 2016. Mr. Takemasu has
led the entire Group with a focus on the domestic convenience store
business, as well as contributed to the improvement of corporate
value and the achievement of sustainable corporate management
as President and CEO, Representative Director, Chairman of theBoard, and CSO* of Lawson, Inc.

Born in 1967; 56 years old. Through his duties at Mitsubishi
Corporation and secondment at overseas companies, among
others, Mr. Itonaga has gained extensive knowledge acrossall areas of management with a focus on financial affairs andaccounting. He has also gained a deep knowledge of all areasof corporate management from serving as the Representative
Director and President of Mitsubishi Corporation Financial andManagement Services (Japan) Ltd., a subsidiary of Mitsubishi
Corporation.

Independent officer

Born in 1965; 57 years old. Ms. Iwamura has been proactively
making suggestions and disseminating information on workstylereforms and the promotion of women’s advancement in theworkplace. She also has deep insight into management,
marketing, and brand reinforcement using digital big data
through her work in marketing in the Asia Pacific and Japanregion for a global IT company.

Satoko Suzuki

Independent officer

Kiyotaka Kikuchi

Years as a Member of the Board: 3
Member of the Board (outside)

Years as a Member of the Board: 2
Member of the Board

Born in 1977; 45 years old. Ms. Suzuki has served as amember of public and private committees related to “hospitality
management” and “globalization of the service industry.” She
has published many papers, presented at academic conferences
and received awards. In addition, she has a wealth of academic
knowledge on consumer behavior, marketing and brandmanagement.

Born in 1966; 56 years old. Mr. Kikuchi has deep knowledge
on the consumer industry field, mainly in the food industry,
through his duties at Mitsubishi Corporation as well as his
secondment to a meat processing manufacturer.

Keiko Yoshida

Yuko Miyata*CSO: Chief Sustainability Officer

Corporate auditors As of May 24, 2023

Shuichi Imagawa

Jun Miyazaki

Yuko Gomi

Years as Corporate Auditor: 3Standing Corporate Auditor

Years as Corporate Auditor: 2Standing Corporate Auditor

Years as Corporate Auditor: 4Corporate Auditor (outside)

Years as Corporate Auditor: 3
Corporate Auditor (outside)

Year as Corporate Auditor: 0
Corporate Auditor (outside)

Born in 1958; 64 years old. Mr. Imagawa has expertise incompliance and risk management, as well as convenience store
operations and the franchise business, based on experienceacquired as manager in charge of the Store Operation Division,
Product and Logistics Division, branch manager, vice presidentof CVS Operations Company in Japan, head of the Sales Division
and CR and Human Resources Executive Officer.

Born in 1955; 67 years old. Mr. Miyazaki has expertise inconvenience store operations and the franchise business, aswell as extensive insight into compliance and risk management,
having been responsible for the Group’s public relations strategy,
human resource strategy, compliance and risk management,
and promotion of health and productivity management in hisrole as the manager in charge of Corporate Communications,
Compliance & Risk Management, Human Resources (deputy
in charge), deputy CSO (Healthcare), and chairman of Lawson
Health Insurance Society.

Born in 1972; 51 years old. Ms. Gomi has extensive businessexperience and broad insight based on her wealth of experiencein corporate legal affairs and risk management as an attorney,
as well as serving as a legal advisor (part time) for the Minister’s
Secretariat of the Cabinet Office.

Born in 1954; 69 years old. As a certified public accountant,
Ms. Yoshida is a representative of an accounting firm and hasa deep knowledge of tax affairs, accounting and management.

Born in 1964; 58 years old. She has extensive experiencein human resources and labor affairs at global companies,
including serving as member of the Board and head of HR andGeneral Affairs at Unilever Japan K.K., as well as executive
officer and general manager of the Human Resources Divisionof Bayer Holding Ltd.

Independent officer

Independent officer

Independent officer

48

Executives

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Members of the Board and Corporate Auditors As of May 24, 2023

Name

PositionIndependent
OutsideOfficer

Nomination and Number ofCompensation
years in
Advisory
current
Committee
position

Main area of experience and expertise
Responsibilities and concurrent positions

Corporate
management

Corporatefinance/accounting

Legal affairs/
complianceand riskMarketing

IT/DX

✓

✓

Global experi- Franchise andence
retail business

Member of the Board

Sadanobu
Takemasu

President and CEO,
Representative Director,
Chairman of the Board

9

CSO

✓

Masayuki
Itonaga

Member of the Board,
Executive Managing Officer

1

CFO

✓

Miki
IwamuraMember of the Board

✓

✓

5

Google Japan LLC
Vice President, Asia-Pacific, Japan (Marketing)✓

SatokoSuzukiMember of the Board

✓

✓

3

Associate Professor, Hitotsubashi University
Business School, School of International
Corporate Strategy

Kiyotaka
KikuchiMember of the Board✓

2

Executive Vice President and Group CEO,
Consumer Industry Group, Mitsubishi
Corporation

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Corporate Auditor

ShuichiImagawa

Standing Corporate Auditor

3

—

✓

✓

✓

Jun
MiyazakiStanding Corporate Auditor

2

—

✓

✓

✓

Yuko
Gomi

Corporate Auditor

✓

✓

4

Lawyer (Partner), T. Kunihiro & Co.
Attorneys-at-Law

✓

Keiko
YoshidaCorporate Auditor

✓

✓

3

Representative, C.P.A., Shiba Accounting
Service Office

Yuko
MiyataCorporate Auditor

✓

✓

0

HR consultant (sole proprietorship)

✓

✓

✓

✓

✓

49

A Discussion by Outside Directors

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Continue to question
the strategy and will
towards growth
Two of Lawson’s five directors are female outside
directors, each with expertise in their respective field.
The two, one an executive at a global IT company andthe other an associate professor at a university, discussed
the current state of Lawson’s board of directors and thechallenges faced.

Miki Iwamura

Satoko Suzuki

Years as a board member: 5

Years as a board member: 3

Focus on free discussion, a broad point of view,and quality discussion

from a broad perspective.

Ms. Iwamura One of the characteristics of Lawson’s board of directors is extremely free and diverse discussions.

Ms. Iwamura For example, recently President Takemasu, CFO Itonaga, and other directors and executive leaders

At Google Japan, where I work, we emphasize psychological safety. At Lawson as well, inside and outside directors

have demonstrated clear leadership in their respective positions, and the results have been reflected in the businessand corporate auditors with diverse backgrounds openly express their opinions and questions beyond their own

performance and stock price. President Takemasu has taken the lead in promoting growth strategies and leading

areas of expertise, and discussions are held in an environment of psychological safety.

company-wide discussions with a high level of enthusiasm and dialogue equality. CFO Itonaga has also been

Ms. Suzuki I agree. Members of the board of directors of Lawson rotate when necessary, so fresh perspectives

proactive in proposing shareholder return policies and other measures while keeping an eye on market conditions,are always introduced. The evaluation of the effectiveness of the board of directors also functions well, and I feelthereby enhancing Lawson’s reputation in the market. As for overseas business, the board of directors has beenthat each director reflects their own role in their awareness of the quality of discussions and the need to see things

coming up with new proposals, which is very encouraging.
50

A Discussion by Outside Directors

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Ms. Suzuki Let me add that President Takemasu has strong ideas about the new image of convenience stores

entertainment. He is also looking at ways to provide new value in the convenience store itself.

and their role as social infrastructure. I am encouraged by the various reforms he is undertaking to realize this vision.

Ms. Iwamura I also think that the most significant recent achievement was the discussion we had on what our

It is also encouraging to see the introduction of the area company system, which aims for community-based store

medium- and long-term growth strategies should be. In considering our growth strategies and business portfolio,

management and the nurturing of the next generation of leaders in each region.

we were able to meaningfully discuss where to find growth drivers, how much to accelerate investment, and how to

Ms. Iwamura The directors are also discussing the need for a clear succession plan at Lawson.

delegate authority in the area company system.

Ms. Suzuki President Takemasu is always conscious of nurturing the next generation; for example, by having

I have been at Google Japan for a long time, so I know firsthand what it means to grow a business. Based on my

manager and leader classes at the in-house Lawson University. I feel that strategic thinking is being developed

knowledge of marketing, I always ask the Lawson management team how they plan to grow, whether they always

throughout the entire organization.

have the seeds for growth, and whether they are communicating their vision in an easy-to-understand manner.

Importance of mechanisms that reflect diversity and expertise

Dynamic discussions realize innovation

Ms. Suzuki In fiscal 2022, an assessment of the board of directors’ effectiveness was conducted by an external

Ms. Iwamura I believe that IT investment is an important part of creating a new convenience store model in the

consultant. We believe that it is important to use the results of this evaluation to further improve the effectiveness of

future. Besides the renewal of legacy systems, our response to new technologies such as generative AI is important.

the board by strengthening its governance and continuing to have frank and open discussions. It is also important to

We need to promote discussions at board meetings in areas such as the establishment of internal and externalbe aware of diversity and to have the board represent a varied cross-section of people.

structures so that we can accumulate knowledge within the organization and take the lead in development while

Ms. Iwamura In terms of diversity, there are not enough women on the executive board. More foreign nationals

flexibly incorporating new technologies.

are also needed in order to promote overseas expansion. IT human capital will also be needed due to their growing

Ms. Suzuki I see that the retail industry often thinks about things from a short-to-medium-term perspective, but

importance in the retail industry. How can we create a system that reflects such diversity and expertise in governance?

I think it is also necessary to have backcasting discussions in which we reconfigure things with a slightly long-term

At meetings of independent outside directors, which I now chair, we exchange opinions on a wide range of issues

strategic mindset.

that are not usually brought up at board meetings, such as the long-term future of the company. These meetings

Ms. Iwamura I too want to focus on growth, so I think it is important to have thorough discussions on how to

are important for Lawson, which is listed as a subsidiary, to ensure that the opinions of minority shareholders arebuild a long-term growth model. In order to achieve innovation, instead of growing just a few percent we should

appropriately reflected in management.

be looking for ways to grow 10-fold. Furthermore, we must be dynamic enough to step on the gas and accelerate
growth while simultaneously discussing what the trade-offs are. While the role of the board of directors is tosupervise management, I believe it is important for outside directors to continue to question the will for growth in

From pandemic response to medium- and long-term strategies

this era of rapid change.

Ms. Suzuki During the pandemic of the past few years, there were many short-term discussions about Lawson,
but since the latter half of fiscal 2022 we have been able to discuss the company’s medium- and long-term growthstrategy. I believe that there are limits to growth in Japan, where the birthrate is declining and the population
is aging, and that it is necessary to take measures aimed at overseas markets. President Takemasu, however,has stated emphatically that there is still room for growth in Japan and that a variety of initiatives are possible.
Using convenience stores as a starting point, he is looking at various possibilities, such as financial services and51

Corporate GovernanceIntroduction

Characteristics of Corporate GovernanceValue Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

but Lawson’s internal organizations make independent decisions regarding management and business activities in general,

We believe that continuous improvement in the value we offer stakeholders contributes to the enhancement of Lawson’s

ensuring Lawson’s independence as a listed company conducting business operations.

corporate value. Accordingly, we strive not only to comply with laws, regulations and social norms but, also, to reinforce

In addition, in the business alliance agreements concluded with Mitsubishi Corporation, it has agreed to conduct a

our corporate governance by improving the soundness and transparency of management through honest and consideratebusiness alliance that respects Lawson’s independence and autonomy. We recognize that our independence is ensured

behavior grounded in high ethical standards which are based on the Group Philosophy, the Lawson Group Corporate

by our parent company.

Conduct Charter and the Lawson Code of Ethics. It also requires active disclosure in accordance with the “Basic Principles

As an independent listed company, Lawson determines the terms and conditions of transactions after comparing andConcerning Information Disclosure.”

examining the prices offered by other companies, prevailing market prices, etc., even in transactions with Mitsubishi

Lawson selects people with different specialties and experience as candidates for membership of the Board to

Corporation, Lawson’s parent company, and its group companies, just like in transactions in general, in order to notassure diversity on the Board of Directors and enable appropriate decision-making and supervision. In addition to thedisadvantage minority shareholders.

independence standards determined by Tokyo Stock Exchange, Inc., Lawson has established its own Judgment Criteria

Also, a Special Committee may be established voluntary to deliberate and review material transactions or actions that

Regarding Independence as a basis for selecting several independent officers (one-third or more for members of theinvolve a conflict of interest between Mitsubishi Corporation and minority shareholders. The Committee, comprised of five

Board) for purposes of ensuring management transparency and fairness. Moreover, by introducing the Executive Officer

members, including the head of the Committee, who are independent outside directors and independent outside corporate

System, we have separated management and supervision from business execution to enable quick decision-making

auditors that are independent from the parent company, provides a structure for reviewing the necessity, rationality, validityand business execution. It should be noted, with respect to the corporate auditors, that we elect candidates for theand fairness of the material transactions or actions based on a high level of independence, and for reporting to the Board

position of corporate auditor based on their possession of the extensive financial, accounting, risk management and/orof Directors.

For more information about Corporate Governancehttps://www.lawson.jp/en/csr/governance/

legal expertise and experience required to fulfill auditors’ duties. Recognizing that the succession plan for the CEO andPresident is an important managerial issue, in order to raise
the level of procedural objectivity, timeliness and transparency,

Details of major corporate governance measures implemented since 2000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

discussions shall be held by the Nomination and Compensation
Advisory Committee, which is a consultative body to the Boardof Directors and is composed solely of part-time officers (fiveout of a total of six of whom are independent officers), andthe Representative Director and President shall present to thisCommittee the qualities and attributes required of the CEO of

Members of the
18
20
Board (persons)Outside members
2of the Board (persons)Subset who are independent
officers (persons)Female membersof the Board (persons)the Company and the method of nominating the successor, andshall gain its approval.

Special circumstances with the potential
to seriously impact corporate governance
Mitsubishi Corporation, our parent company, currently
holds 50.2% of Lawson’s voting rights (50,150,000 shares).
Lawson has a business alliance with Mitsubishi Corporation,

8
3

9

9*

1

7

5

3

4
1

1

2

7
3*

2

5

2

2002 – Compensation Advisory Committee established.
Ensuring
transparencyof Board members’
compensation

8

5
2

3

2

3

2

2014 – Nomination and Compensation Advisory Committee established.

2005 – Board members’ retirement benefit system abolished.
2005 – Share-based stock compensation options for members of the Board introduced.
2012 – Corporate auditors’ retirement benefit system abolished.

Ratio of shares heldby Mitsubishi
Corporation(major movements)

2001 – Mitsubishi Corporation becomes largest shareholder.

April 2015

February 201733.4% 50.1%*1 The number of members of the Board is as of the close of the General Meeting of Shareholders each year. An exception to this was 2014, when there were nine members of the Board up to July 31 and eight members after August 1.
*2 The reduction in the number of outside members of the Board in 2017 was because two no longer satisfied the requirements of outside members of the Board due to the increase in the ratio of shares held by Mitsubishi Corporation.

52

Corporate GovernanceIntroduction

Corporate Governance System

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Operation status of the Board of Directors

Equipped with an agile decision-making process, Lawson has moved quickly to construct a highly transparent

The Company’s Board of Directors is made up of five members of the Board, including three males and two females,

and independent corporate governance system. Independent officers who are considered to have no conflict of

two of whom are independent members of the Board. The Board of Directors not only decides important management

interest with general shareholders have been appointed to comprise at least one-third of the members of the Board.

matters, such as issues stipulated by laws and regulations and the Articles of Incorporation, but also monitors the conduct

Moreover, with a view to promoting diversity with the composition of the executive officers taken into consideration,of business operations by the members of the Board. The Board met 12 times in fiscal 2022. Furthermore, the Company

five women have been appointed to the position of member of the Board or corporate auditor. They are contributing

has adopted an executive officer system and entrusts authority to executive officers to expedite business execution.

to reinforcing the corporate governance system from various perspectives. Following the voluntary establishment ofMoreover, the Company holds management meetings as a supplementary decision-making body to the Board of Directors.

the Nomination and Compensation Advisory Committee to express its opinion on the candidates for the positions of

The management meetings are comprised of personnel who are generally of executive managing officer level or above andmember of the Board and representative director on the Board of Directors, independent officers have been selected

members designated by the president and CEO (and met 14 times in fiscal 2022).

to fill five of six positions as Committee members, thus creating a system where opinions can be expressed with ahigh degree of independence. Going forward, we will continue our efforts to ensure management transparency andindependence and to improve corporate value to meet the expectations of all our stakeholders.
Corporate Governance System (as of May 25, 2023)

General Meeting of Shareholders
Nomination and Compensation
Advisory Committee
Non-executive directors
or part-time outside
corporate auditors: 6(5 of whom are independent officers)

Special Committee

Appointment
and dismissal

Appointment
and dismissal

Appointment
and dismissal

Consult
ProposeAuditing

Auditing

Board of Directors
Outside members of the Board: 2(2 of whom are independent officers)
In-house directors: 3
Total: 5

Outside corporate auditors: 3(3 of whom are independent directors)
In-house corporate auditors: 2
Total: 5

Consult

Operational Organization
Financial Reporting Internal Control Committee

Discussion andreporting

The following is the activity status of the Nomination and Compensation Advisory Committee, comprised of part-timeCommittee Activity Status

President

Fiscal 2022 attendance rate

Management meeting
Internal Audit OfficeCompliance & Risk Management Committee

Corporate divisions

Lawyers
Comments

Name

Matters for deliberation

Composition

Division and Company

OutsideOutsideOutsideofmembers of members of members of Members
the Board
the Board
the Board
the Board
Keiko
Kiyotaka
Miki
SatokoHayashiIwamuraSuzukiRetired in May
Kikuchi
2022

Outsidecorporate
auditors
Eiko
Tsujiyama

Outsidecorporate
auditors

Outsidecorporate
auditors

Yuko
Gomi

Keiko
YoshidaRetired in May
2023

Nomination andCompensation
Advisory Committee

Director compensation (system,
evaluation, etc.) and director candidate
and representative director candidate Part-time
consultation, successor planning officers only
deliberation, recommendations to theBoard of Directors

100%(Attend 2/2
meetings)

100%(Attend 3/3
meetings)

100%(Attend 3/3
meetings)

100%(Attend 3/3
meetings)

100%(Attend 3/3
meetings)

100%(Attend 3/3
meetings)

100%(Attend 3/3
meetings)

Special Committee

Advance deliberation of matters for the
Board of Directors related to important Independenttransactions with Mitsubishi Corporation officers only
and its subsidiaries—

100%(Attend 3/3
meetings)

100%(Attend 3/3
meetings)—

100%(Attend 3/3
meetings)

100%(Attend 3/3
meetings)

100%(Attend 3/3
meetings)

Investment and management

Subsidiaries and Affiliates• Results of evaluation of Board of Directors’ effectiveness• Financial reporting internal control-related matters• Revision of important rules• Policy on strategically-held shares• Revision of corporate governance reporting• Accounting-related matters• General meeting of shareholders-related matters• Business execution status reporting• Conflict of interest transaction approval/reporting

officers, and the Special Committee.

Auditing

SDGs Committee
Information Security Management Committee• Management strategy for next fiscal year
• Organizational structure for next fiscal year
• Officer appointment• Officer compensation• Revision of Lawson Group Corporate Conduct Charter• Action Plan for Lawson Group’s Challenge 2025
• Company-wide digital transformation policy• Report for major KPI company-wide• Continuity of subsidiary business• Internal control system development basic policy

Status of committees
Accounting
auditing

Outside members of the Board: 2
Outside corporate auditors: 3 Propose(5 of whom are independent officers)

Appointment, dismissaland supervision

Certified public
accountant

Audit & Supervisory Board Dismissal

Main agenda items for the Board of Directors (fiscal 2022)

53

Corporate Governance

Policy on nomination and standards for appointment
and independence of candidates for member of the Board
Lawson has established criteria for appointing officers and for making judgments regarding independence.
The voluntarily established Nomination and Compensation Advisory Committee serves as an advisory body and,moreover, expresses its opinion to the Board of Directors regarding nominations of candidates for the positions ofmember of the Board and representative director. It should be noted with respect to candidates for corporate auditor
that they are individuals with the financial, accounting, risk management and/or legal experience and expertise
required to fulfill the duties of corporate auditors whose candidacy is approved by the Audit & Supervisory Board.
For more information about appointment criteria for officers and judgment criteria regarding independence
https://www.lawson.jp/en/csr/governance/

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

3. High-level communication skills
4. Broad perspectives for viewing the Group as a whole and strong commitment to governance
5. High ethical standards
The attributes for the successor do not specify whether they need to be from inside or outside of the Company.
When selecting successors, multiple candidates are presented to the Nomination and Compensation Advisory
Committee.

Officers’ Compensation
Basic policy
Lawson’s policy is to design its remuneration system in a manner that links Board members’ compensation withreturns to shareholders, while retaining its function as an incentive for enhancement of corporate value, continuous

Support systems for outside members of the Board and outside corporate auditors

growth and improvement of corporate performance and ensuring a sufficient and appropriate level of remuneration

The Board of Directors Secretariat is established to conduct administrative tasks for the Board of Directors,

compensation component linked to the Company’s performance, moreover, as well as a fixed compensation

communicate with the part-time officers, and submit reports each time an incident/accident occurs. The Corporate

component. In order to more clearly reflect the contribution of Board members to improving shareholder value,

Auditors Office, with two full-time staff members, is established to support the corporate auditors in their duties,

variable compensation operates in tandem with indicators such as EPS (earnings per share) and SDGs targets

conduct administrative tasks for the Audit & Supervisory Board, and communicate with the outside corporate auditors.

(CO2 emissions reduction rate, etc.). Share-based stock options – share price-linked compensation – are also

Outside officers are provided with opportunities to acquire essential knowledge concerning the operations,

to reward individual members of the Board for the duties they perform. The base compensation includes a variable

incorporated as part of the remuneration to strengthen the linkage with returns to shareholders.

finances, organization, etc., of the Group. Furthermore, to enable them to deepen their understanding of the Group’sbusiness, they are given the opportunity to participate in key events and to tour Group-related facilities. In order for
independent outside officers to actively contribute to discussions at the Board of Directors’ meetings, the Company
is set to hold meetings to exchange opinions with only independent outside officers at least once a year.

Succession planning for chief executive officers
Lawson recognizes that the succession plan of the president and CEO is a key management issue; thus, acting
as an advisory body to the Board of Directors in order to augment the impartiality, timeliness, and transparency ofthe process, discussions are carried out among members of the Nomination and Compensation Advisory Committee,
comprised only from part-time officers (five members out of the total six are independent officers), which determines
the qualifications and attributes required as Lawson’s chief executive officer as described below. Then, the methodof developing and nominating the successor is presented to the committee by the President and CEO for approval.
1. Ability to respond to change and power to create change
2. Strong leadership

A + B =Board members’ compensation
A Base compensation
Consisting of: fixed compensation (about 60%) + variable compensation (about 40%)
Fixed compensation:An amount commensurate with the position determined based on internal rules
Variable compensation:Using performance-linked compensation that combines performance evaluation for EPS(earnings per share) for each term and an evaluation of SDGs targets (CO2 emissions reduction rate, etc.)(in order for Board member compensation to operate in line with shareholder profits)

B Share-price linked compensation
Stock options offered through allocation of shares(Recognized as compensation linked to medium- and long-term improvement in corporate value)• Exercise price per share: 1 yen• Number of shares allocated: Determined according to the number of shares allocated in accordancewith the Board member’s position and the rate of achievement of the EPS target.
• Exercise period: Exercisable only within a predetermined period after leaving the Company (not exercisable during tenure in office)54

Corporate GovernanceIntroduction

Details of Board members’ compensation

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Results of analysis and assessment by an external organization

Board members’ compensation paid by Lawson consists of A base compensation through cash payments and B share price-linked• Directors and corporate auditors actively exchange opinions at the Board of Directors’ meetings, and business execution

compensation through stock option allocations. Note that no performance-based variable compensation is paid to part-time members

is monitored based on candid reporting from the execution side, indicating that each officer is actively engaged in fulfillinof the Board, because they serve the representative directors and Board of Directors in a specialized supervisory and advisory capacity.

his/her supervisory function.
• In order to make the Board of Directors more effective, it is desirable to conduct discussions and share information by

Details of corporate auditors’ compensation
Corporate auditors’ compensation is determined according to a basic policy of paying compensation at a sufficient and appropriate

prioritizing the following points.

level in consideration of the duties performed by individual corporate auditors. It comprises base compensation (fixed compensation)

1.Sharing important agendas to be determined by the Board of Directors (medium-term strategy, business portfolio, etc.)

paid in cash. The amount is determined through consultation with the corporate auditors, with consideration given to such factors

2.Reviewing monitoring targets and monitoring methods by the Board of Directors (including verification of the validity ofas full-time or part-time status and share of the auditing work, within a range approved by the General Meeting of Shareholders.

current rules and standards)

Disclosure method for officers’ compensation

3.Composition of the Board of Directors, etc.
• Since Lawson is listed as a subsidiary, it is also very important to ensure that matters can be explained to minority

Total amounts of officers’ compensation are listed in the Company’s securities reports and business reports.

shareholders and other stakeholders.

Details of officers’ compensation (fiscal 2022)

Total compensation, total amounts by type of compensation and number of eligible officers per company officer category
Board of Directors and Audit & Supervisory Board member compensation amount
Category

Total
compensation

Members of the Board(subset who are outside
members of the Board)
Corporate auditors(subset who are outside
corporate auditors)
Total

202

Total by type of compensation
Fixed compensation Variable compensation
Stock options
104
59
38

(Millions of yen)
Number of eligible
officers
8

(25)

(22)

(—)

(3)

(3)

84

84

—

—

5

(36)

(36)

(—)

(—)

(3)

286

188

59

38

13

Note: There were five members of the Board and five corporate auditors as of the end of February 2023.

Assessment of the Board of Directors’ effectiveness• In advancing the above discussion and information sharing, it is extremely important for the execution side to share
information. It is recommended that the content and level of detail of information required for discussion, and theselection and priority of initiatives, be sufficiently coordinated with the execution side.
Going forward, in addition to the results of the aforementioned evaluation results of the effectiveness of the Board of
Directors, we will refer to discussions at the opinion exchange meeting by independent officers and the Board of Directors’
meetings to enhance discussions on medium- and long-term management issues and the role of the Board of Directors,
and will further improve the operation of the Board of Directors to enhance the effectiveness of the Board of Directors.

Strategically-held shares
Lawson sometimes holds listed shares strategically forthe purpose of raising its value over the medium- and long-

In order to further enforce the effectiveness and functions of the Board of Directors, the Company conducts a “self-assessment on theterm through cooperation each other, but we endeavor toeffectiveness of the Board of Directors” every year, mainly consisting of a document survey to be completed by all members of the Board

keep such holdings to the minimum required. When acquiringand corporate auditors. For this survey, responses from all members of the Board of Directors and Audit & Supervisory Board members are

such holdings, we perform a detailed investigation for eachcompiled and analyzed. Every three years, an external assessment is conducted, and such an assessment was performed in fiscal 2022.

individual issue to ascertain whether the purpose of holding[ Summary of external evaluation results]

is appropriate, whether the benefits and risks associated

1.External consultants conducted surveys and individual interviews with all officers

with holding are commensurate with the cost of capital, etc.

2.External consultants reviewed and analyzed materials for the Board of Directors’ meetings and analyzed andFurthermore, each year the Board of Directors reviews theevaluated the results of surveys and interviews
3.Independent officers held meetings to exchange opinions on evaluation results

appropriateness of holdings, and, as of the end of February
2023, we held three different listed stocks.

Number of specified investment stocks / balance sheet amount
Number of stocks (left axis)
Balance sheet amount (right axis)

54

5
11,162

15,000

4
8,339

3

4

12,000

3
7,009

2

9,000

2

6,000

1
0
(Stock)

3,000

2018

2019

2020

192

483

2021

2022 year

Fiscal Millionsof yen0

4.Reported the analysis and evaluation results to the Board of Directors and conducted discussions
55

Compliance and Risk Management

Internal Control

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Assuring continuity of business operations

The business of Lawson Group encompasses a wide-range of operations, from the core business of convenience

At Lawson, we have defined those basic business continuity management (BCM) matters that need to be

stores to high-end supermarkets and entertainment-related business, to financial, e-commerce, and consulting

addressed in the event that there is a functional failure of our management resources or a large number of ourservices. We operate a large number of LAWSON stores, covering every prefecture in Japan and several markets

employees are unable to perform their work duties.

overseas, each of which offers a wide variety of products and services. As such, we are not only required to observevarious laws and regulations but must also assess the diverse range of possible risks and implement the appropriate
countermeasures. In light of these characteristics, Lawson has established the Basic Policy for Maintaining an

Business continuity management (BCM) basic policy• Maintaining the Lawson brandInternal Control System to support its efforts to achieve healthy, sustainable growth. We are promoting maintenance

Under our Group philosophy of “Creating Happiness and Harmony in Our Communities,” and with a strongof our internal control system based on this policy, while responding to changes in our management environment,

awareness of our corporate social responsibility, we will endeavor to pursue store operations which prioritize humanconducting periodic reviews of the policy itself, and endeavoring to maintain and enhance an effective, practicallife and safety, even during large-scale disasters and other times of great risk, to supply products and services thatinternal control system.

maintain the Lawson brand by fulfilling our mission as a “community lifeline.”
For more information about the internal control system
https://www.lawson.jp/en/csr/governance/• Continuation of the franchise businessWe will continue to develop our franchise business so that, even in the event of serious risks, we can ensure agiven, essential level of operations required of a franchise headquarters, specifying the timeline and means by which

Compliance and Risk Management Systembusiness and operations will be restored so that franchise business can continue.
• Securing appropriate earnings

Lawson has established a compliance and risk management framework so that all employees can take action

In order to put into practice our Group philosophy of “Creating Happiness and Harmony in Our Communities,” webased on the Corporate Conduct Charter and the Lawson Code of Ethics. We implement an ongoing PDCA cycle while

will ensure (generate) a level of profitability which is appropriate and essential to our survival as a company. Towards

maintaining an organic link between our behavioral standards, education and training, communication functions andthat end, we will formulate countermeasures that take into consideration the impact on earnings that serious risks,monitoring activities for the purpose of ensuring we are a good corporate citizen acting with high ethical standards,

as well as social conditions, laws and other factors, may have.

integrity and compassion.
• Preparing for disasters and helping communities to recover
The Lawson Group seeks to not only to be prepared in the event of a disaster but also to serve as a community

For more information about compliancehttps://www.lawson.jp/en/csr/governance/compliance/

lifeline afterwards by acting swiftly to ensure the continuity of store operations. Also, to support those affected by

For more information about risk management
https://www.lawson.jp/en/csr/governance/risk/

well as to raise disaster relief funds and provide other assistance.

disaster, we work with local governments to deliver food, daily necessities and other emergency relief supplies, as

For more information about continuity of business
https://www.lawson.jp/en/csr/governance/continuation/

56

Compliance and Risk Management

Introduction

Value Creation

Strategy

Sustainability

Corporate Governance

Finance / Company Information

Business Risks
Company-wide risk matrix (Excerpt of major risks only)

CategoryNo.

Main risks
Risks related to M&A and

Impact① business alliances

⑨

⑤

⑩

High

⑦
⑯

Risks related to the franchise② store business
Management strategy risks⑮

Risks related to the banking③ business

Risks related to raw materials

⑬

①

④

②

③

Risk response measures• When entering into agreements, such as acquiring shares or forming a business alliance: conduct prior study (such as
third-party surveys, etc.); facilitate decision-making by formulating detailed business plans and clear criteria forwithdrawing from an agreement; and periodically monitor the agreement afterwards.
• Provide sufficient information and appropriate support through daily communication with franchise stores to prevent
misconduct incidents, etc.
• Build partnerships with franchise stores by conducting various initiatives for continued stable store operations.
• Compliance with laws and regulations through compliance training, etc., at Lawson Bank, Inc.
• Respond to environmental changes by sharing information through regular communication between Lawson Bank, Inc.
and the Company, and examination of synergy creation.

④ procurement• Secure substitute materials, identical raw materials from different production areas, and multiple procurement channels.

⑤ Risks related to climate change• Formulate countermeasures, such as risk avoidance, mitigation and insured transfer, of risks based on an evaluation of
their degree of impact on business.

Medium• Perform a detailed investment profitability analysis when acquiring tangible fixed assets.

⑥⑪⑥ Risks related to asset impairment • Perform credit checks as necessary on new suppliers and other business associates, and perform thorough⑫

management of existing receivables and other such assets.

Financial risk⑭

Risks related to funding⑦ procurement

Risks related to exchange rate

⑧ fluctuation

Low

Operational risks

Low

MediumHigh• Work with suppliers and stores to ensure quality management, hygiene management and expiry date managementfrom the production process through to delivery and sales.
• Develop a system for pre-checks and information storage in order to ensure proper labeling.

⑩ Risks related to IT systems• Implement multifaceted countermeasures for cyber security, including technical, process/personnel, and physicalaspects, as well as training in preparation

Risks related to handling ofFrequency[Frequency]
High: Trending upwardMedium: Largely unchanging
Low: Trending downward⑪ personal information• Thoroughly promote information security measures and Lawson Group Privacy Policy inside the Group.

⑫ Risks related to reputation• Implement compliance/risk management training.
• When a problem arises, provide prompt information disclosure to minimize the impact on customers and other relevant parties.

⑬ Risks related to laws, regulations, etc. • Continually gather and analyze information about legal and regulatory revisions, etc., and respond proactively.

[Impact]
High: Disruption of business which lasts a month or more,damages of 10 billion yen or more...etc.
Medium: Disruption of business which lasts between a week to just under a month,damages of between 2 billion and just under 10 billion yen...etc.
Low: Disruption of business which lasts a week, damages below 2 billion yen...etc.

• Diversify the contract volume and timing for products, raw materials, etc., procured overseas.

⑨ safety

Risks related to food product⑧• Diversify fund procurement sources and means.
• Pay close attention to market trends, such as for interest rates; diversify funding procurement sources and lending
periods; and procure funding at fixed interest rates.

Compliance risks⑭ Risks related to human rights• Formulate a Lawson Group Human Rights Policy and ensure it is pursued by promoting human rights due diligence.
• Conduct supplier surveys and individual dialog, CSR audit and in-house training related to “business and human rights.”• Establish a consultation service for employees and suppliers, and provide corrective/remedial action.

⑮

Risks related to disasters• Conduct training three times per year which prioritizes human life and safety, and ensure the effectiveness of theDisaster Relief Manual and other resources.
• Develop a business continuity management (BCM) structure, and formulate business continuity plans (BCP) for
responding to anticipated scenarios, such as an earthquake with its epicenter in Tokyo.

⑯ Risks related to COVID-19• Develop a business continuity management-related structure, rules, etc., that will ensure a given, essential level ofoperations required of a franchise headquarters.
• Under the leadership of the Lawson Group Sweeping Transformation Executive Committee, tackle the challenge ofanticipating new needs and adapting to the new normal.

Hazard risks

57