Securities Code: 2914
March 4, 2019
To Our Valued Shareholders
Masamichi Terabatake
Representative Director and President

Japan Tobacco Inc.
2-1, Toranomon 2-chome, Minato-ku, Tokyo

Supplemental Information regarding JT proposals inThe 34th Ordinary General Meeting of Shareholders
Regarding JT’s proposals to be submitted to the 34th Ordinary General Meeting ofShareholders, scheduled on March 20th 2019, JT has received inquiries from someshareholders regarding “Item 4: Election of Five (5) Audit & Supervisory Board Members”, and“Item 6: Revision of Amount of Stock Option Granted to Members of the Board”.
This information intends to answer those inquiries in order to support your decisions to vote.

1.

Item 4 in the Matters to be Resolved: Election of Five (5) Audit & Supervisory Board
Members (Candidate Number 5 – Mr. Koji Yoshikuni)*please refer Page 16 of the Notice of Convocation-Mr. Koji Yoshikuni held several positions at Japan Broadcasting Corporation (“NHK”),
such as Director Responsible for Finance of News Department, Chief of Secretariat for
Board of Governors, and Executive Director. We received some inquiries from theshareholders about the “business relationship between JT and NHK”.

-JT pays certain amount of TV broadcast receiving fees to NHK pursuant to thebroadcast receiving contract which must be executed upon installation of broadcast
receivers in JT’s facilities in accordance with Broadcasting Services Act.

-Such payment is statutorily required and non-negotiable (no space for arbitrariness)thus no influence on Mr. Yoshikuni’s independence. Therefore, JT did not include
such payment in JT’s Notice of Convocation. Also, we did not include it inJT’s Independent Directors /Auditors Notification, submitted to Tokyo Stock
Exchange on Feb 27, 2019 as well.

-For your reference, the amount of such payment in 2018 was negligible, less than JPY
5 million yen (approximately USD 42,000), which is less than 0.001% of ordinary
business revenues for NHK in the fiscal year ended March 2017, and less than 0.001%
of JT’s consolidated revenue in fiscal year ended December 2018.

-JT has no business transaction with NHK aside from the payment for aforementioned
TV receiving fees.

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Item 6 in the Matters to be Resolved: Revision of Amount of Stock Option Granted toMembers of the Board*please refer Page 20 of the Notice of Convocation-JT received a question “whether JT is going to revise the condition for exercising JT’s
stock options, which are already granted or going to be granted to the Members of theBoard.”-JT’s proposal in Item 6 is to revise the amount of stock option granted to Members ofthe Board with a need to maintain the remuneration level in order to secure thedistinguished talent and due to increasing the number of the Board Members which issubject to Item 3 in the Matters to be resolved.

-The aim of this Item 6 is solely to revise the remuneration amount as the reasonsmentioned above, and definitely NOT to change the terms of JT’s stock option plan.

-Therefore, the existing condition for exercising JT’s stock option has never been
modified and JT has no intention to change the condition for outstanding stock options
as well as the new stock options to be granted. For your reference, the existing
condition to exercise JT’s stock option is as follows:“Subscription rights to shares holder may exercise his/her subscription rights toshares only if he/she loses his/her all position as Member of the Board, Audit &Supervisory Board Member and Executive Officer (sikkoyakuin).”(Stock Options are not to be granted to Audit & Supervisory Board Members andOutside Directors.)※ The above-mentioned condition for exercise has been appropriately disclosed inJT’s release upon grant of the stock option every year and in the page 45 and 46of English translation of the Notice of Convocation (as attached below).

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(Attachment: page 45 and 46 of The Notice of Convocation)

III. Matters Concerning Subscription Rights to Shares
1.

Total number and others of subscription rights to shares as of December 31, 2018

(1) Total number of subscription rights to shares:
4,147 units(2) Class and number of shares to be delivered upon exercise of subscription rights to shares:
Ordinary shares

829,400 shares(200 shares per subscription right to shares)

2.

Status of subscription rights to shares held by Members of the Board and Audit & Supervisory Board
Members of JT as of December 31, 2018

(1) Class and number of shares to be delivered upon exercise of subscription rights to shares:
Ordinary shares

237,200 shares(200 shares per subscription right to shares)(2) Value of property to be contributed when subscription rights to shares are exercised:¥1 per share(3) Assignment of subscription rights to shares
The approval of the Board of Directors is required for the assignment of subscription rights to shares.

(4) Conditions for exercising subscription rights to shares
Subscription rights to shares holder may exercise his/her subscription rights to shares only if he/she loses
his/her all position as Member of the Board, Audit & Supervisory Board Member and Executive Officer(sikkoyakuin).

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(5) Status of ownership by Members of the Board and Audit & Supervisory Board Members of JT

Year
grantedPayment due
upon allotment ofsubscription
rights to shares

FY2007¥581,269 per unit

FY2008¥285,904 per unit

FY2009¥197,517 per unit

FY2010¥198,386 per unit

FY2011¥277,947 per unit

FY2012¥320,000 per unit

FY2013¥513,400 per unit

FY2014¥483,200 per unit

FY2015¥711,200 per unit

FY2016¥572,600 per unit

FY2017¥482,200 per unit

FY2018¥300,000 per unit

(Notes)1.
2.

Exercise period of
subscription rights toshares
From January 9, 2008
to January 8, 2038
From October 7, 2008
to October 6, 2038
From October 14, 2009
to October 13, 2039
From October 5, 2010
to October 4, 2040
From October 4, 2011
to October 3, 2041
From October 10, 2012
to October 9, 2042
From October 8, 2013
to October 7, 2043
From October 7, 2014
to October 6, 2044
From August 4, 2015
to August 3, 2045
From July 5, 2016
to July 4, 2046
From July 4, 2017
to July 3, 2047
From July 3, 2018
to July 2, 2048

Members of the Board

Audit & Supervisory
Board Members

Numberof units

Number ofshareholders

Numberof units

Number ofshareholders

161--

18

115

140

136

142

130

19132

150

323149314163481106417196

4131144

4211344

5--

Outside Directors are not included in the above category of “Members of the Board.”
The subscription rights to shares owned by an Audit & Supervisory Board Member are thosethat were granted to the individual while he was serving as an Executive Officer (sikkoyakuin).

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