Lawson, Inc.

CORPORATE GOVERNANCE
Last update: November 17 2021
Sadanobu Takemasu,
President and CEO, Representative
Director, Chairman of the Board
Contact: +81-(0)3-5435-2773
Securities Code Number: 2651
https://www.lawson.jp/en/
The current status of Lawson’s corporate governance is as follows:

I

Basic Approach to Corporate Governance, Capital Structure, Corporate
Attributes, and Other Basic Information

We place great importance on stakeholder under group philosophy “Creating Happiness and Harmony in Our
Communities,” and strive to maximize enterprise value by making Lawson stores a place where 1.

the customer is always made to feel welcome

2.

franchised store owners can feel that they are realizing their full potential

3.

part-time staff and workers on short-term contracts can develop their skills and grow as a result of their own efforts

4.

suppliers and service providers see their dreams take shape5.

employees can take pride in their work and really feel a sense of being useful to the society

6.

shareholders can contribute indirectly to society and invest in their dreams for the future, and7.

members of customer communities can feel welcome and safe.
These are our goals, and the realization of these objectives will contribute to the maximization of enterprise value. To

this end, we will continue to ensure that laws and regulations are strictly observed, and social codes of conduct arehonored. In accordance with Lawson’s group philosophy and the Lawson’s Code of Ethics, we will give attention topeople requiring support. Moreover, we believe it is important to increase management soundness and transparency aswell as to raise corporate governance standards through compliance and rigorous disclosure.
Based on the above basic approach, regarding basic views on composition of Board of Directors and policies in theappointment of officer, please refer to section I.1 “Basic views on composition of Board of Directors and policies in theappointment of officers” in “Basic Approach” in this report.

[Reasons for not implementing all the principles of the Corporate Governance Code]The following Supplementary Principle is described in accordance with the Corporate Governance Code as revised inJune 2021.
<Supplementary Principle 5-2(1): Basic Policy on Business Portfolio and Status of Business Portfolio Review>
The Company presents its investment policy (judgment on business continuation and withdrawal) for listed shares held
for strategic purposes to the Board of Directors every year, and likewise reports its investment policy for shares other than1

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CORPORATE GOVERNANCE
those held for strategic purposes, including those of the Company’s major subsidiaries. The Company will continue todiscuss its basic policy on the business portfolio and the review thereof at the Board of Directors’ meetings and disclose
them in April 2022.
[Disclosures based on each principle of the Corporate Governance Code]
The Company’s initiatives in the area of corporate governance are described not only this report, but also in convocation
notices for shareholders’ meetings, annual securities reports, integrated reports, and so on.
Details of the disclosure components of each principle of the Corporate Governance Code are as follows:<Principle 1-3 Basic Strategy for Capital Policy>
The Company strives to achieve business growth by setting the improvement of return on equity (ROE: consolidated profit
as a percentage of owners’ equity) and earnings per share (EPS) as its target in order to optimize the use of shareholders’equity and to better share value with shareholders and link this to the Company’s operating results.
Furthermore, in the course of achieving sustainable growth for the Group, our basic policy is to pay stable dividends of atleast 150 yen per share per year with a target consolidated payout ratio of 50%, while maintaining the retained reserves
required for future business expansion.
Note that we endeavor to employ retained reserves to raise our corporate value by allocating them to essential business
investments such as opening new stores, refurbishing existing stores, and launching new businesses.

<Principle 1-4 Policy on Strategic Holdings and Standards Concerning the Exercise of Voting Rights in the Case ofStrategically-Held Shares>
The Company sometimes holds listed shares strategically for the purposes of raising its value over the medium to longterm, but we endeavor to keep such holdings to the minimum required. When acquiring such holdings, we perform a detailed
investigation for each individual issue to ascertain whether the purpose of holding is appropriate, whether the benefits andrisks associated with holding are commensurate with the cost of capital, etc. Furthermore, each year the Board of Directors
reviews the appropriateness of holdings, and as of the end of February 2021, we held four different listed stocks. From time
to time we review the reasons for these strategic shareholdings, taking into account, for example, their impact on increasing
our corporate value. Furthermore, when acquiring or disposing of listed shares, we ensure compliance with insider trading
rules.
Regarding voting rights in the case of strategically-held shares, given that our primary goal is to raise the Company’svalue, we examine each proposal from the standpoint of whether it will increase the shareholder value of the investee
company over the medium to long term, after which we exercise our voting rights accordingly. Regarding the exercise of
voting rights, based on internal rules, the department in charge examines each proposal, such as the use of surplus funds, theappointment of officers, and changes to officer compensation, taking into account both quantitative and qualitative aspectsof the condition and performance of the company concerned (operating results, capital efficiency, etc.), after which we
exercise our voting rights in an appropriate manner. Furthermore, if we need to confirm, for example, the purpose of a
proposal, we engage in dialog with the investee company before deciding how to exercise our voting rights.

2

Lawson, Inc.

CORPORATE GOVERNANCE<Principle 1-7 Framework for Confirmation of Related Party Transactions>
In its rules for the Board of Directors, the Company has designated competitive transactions, personal transactions, andconflict-of-interest transactions by directors as requiring Board approval, and ensures that directors are aware of this.
Furthermore, the same rules also stipulate that transactions executed with the approval of the Board be reported to the Board
once every three months. Moreover, a system is in place to ensure that transactions with major shareholders do notcompromise the interests of the Company or its shareholders.

<Supplementary Principle 2-4(1): Ensuring Diversity in Appointment of Core Human Resources>(1) Views on ensuring diversity
We believe that maximizing the capabilities and potential of all employees, including female and non-Japaneseemployees, and creating new innovations will lead to an increase in corporate value, and we position diversity as one of ourmanagement strategies.
In order to promote diversity management, a Diversity Promotion Officer has been appointed. Under the direction of the
President, the Diversity Promotion Officer is promoting necessary system design, operations, and appointments incooperation with the Human Resources Division. In addition, we endeavor to actively promote human resources diversity inthe appointment of core human resources, such as managers.

[Diversity Policy]
Lawson’s group philosophy is “Creating Happiness and Harmony in Our Communities.” This corporate philosophy
means contributing to towns and growing in happiness with them by acknowledging the diverse nature of society, andcreating new products and services that correspond to environmental changes.
According to the differences in background factors such as gender, sexual orientation, sexual recognition, nationality, age,
people are engendered with a myriad of ways of thinking, and in society itself there exist a huge variety of schools ofthought. We create equal employment opportunities without discriminating against such differences.
Furthermore, in order to grow as a member of the global community and aim for improved corporate value we have tointercommunicate with an array of people not just in Japan but across the globe. We will therefore cast off all ourstereotyped views, ensure the capabilities and potential of all employees including women and those of other nationalities
are maximized, launch new innovations, and try to achieve an improvement in our corporate value. This is what we at
Lawson mean by the term ‘diversity.’ Diversity is a strength that is irreplaceable for Lawson’s growth, and a concept that wewill wholeheartedly promote.

(2) Status of ensuring diversity and voluntary and measurable targets[Female employees]
In our desire to retain our female employees over the long term, we have introduced such programs as careerdevelopment training, childcare leave training, and elective leadership training to support young women in their career and3

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CORPORATE GOVERNANCE
life planning. We are also taking steps to develop female management candidates in our Next-Generation Development
Committee, which aims to develop the next generation of leaders for senior management roles from among our generalmanagers .
We have been working to boost our hiring efforts with the aim of achieving a 30% ratio of female employees in 2030, andin the recruitment of new graduates since 2005, we have targeted a fifty-fifty ratio of male and female new hires. The ratioof female managers in fiscal 2020 was 10.7%. With the qualitative goal of “A society where women can bring up children
while continuing to work,” we have set the numerical target of increasing the ratio of female managers to 30% in 2030.
And in 2014 we established the “Happy Lawson Nursery” within one of our business sites, thus supporting employees tocontinue working while simultaneously bringing up children. We have also declared a goal of getting 90% of eligible male
employees to take childcare leave, and after surpassing 80% in fiscal 2016, the figure reached 90% in fiscal 2018 and 94%
in fiscal 2020. By encouraging men to play a greater role in raising their children, we aim to become a company that is
comfortable to work at for both men and women.

[Non-Japanese employees]
We have been actively hiring non-Japanese employees since 2008. In the recruitment of new graduates, we havecontinued efforts with the target of increasing the ratio of non-Japanese employees to 10 to 20%, and more than 150 nonJapanese employees are currently employed and taking active roles (ratio of international employees at the end of 2020:3.4%).
The ratio of non-Japanese managers in fiscal 2020 was 1.1%. While continuing recruitment efforts with the aim ofincreasing the ratio of international employees among new graduate hires to 15%, we will make ongoing efforts indeveloping and promoting non-Japanese employees.

[Lateral hires]
In lateral recruitment, we mainly hire individuals with various career backgrounds who have experience in otherindustries, special skills and know-how, and who are not bound by fixed concepts within the industry or the Company. The
ratio of lateral-hire managers in fiscal 2020 was 42.7%, and we will endeavor to maintain a similar ratio in the future.

(3) Human resources development policy aimed at ensuring diversity, internal environment development policy, and current
statusThe Company has focused on the development of core human resources who are tasked with realizing its Groupphilosophy and Lawson’s Way (Action Guideline). The kind of talent that we look for at Lawson is people who can create
value through collaboration based on teamwork, who can transform themselves in order to constantly generate value, andwho can accomplish goals—and the ability to “think and act on their own initiative” is key. We operate a developmental
personnel system aimed at encouraging every employee to think and act on their own initiative toward realizing the Groupphilosophy, including how to act as an employee and how to fulfill their own duties in order to achieve annual missions.
With the aim of creating a corporate culture in which employees act on their own initiative, the personnel system clarifies

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CORPORATE GOVERNANCE
the scope of responsibility and the roles to be played in accordance with their duties, and a system to evaluate the behavior
of individual employees has been introduced. As part of this, we use two evaluation systems to decide compensation andpromote personnel development: the Employee Behavior and Skill Level Evaluation, which evaluates the employee
behaviors (processes) that produce positive results; and the Performance Evaluation, which assesses the results of the
behavior. In addition, we use Career Development Sheets to help each employee draw a clear picture of his or her future
career path. We ask each employee to look back on his or her past career and current position and clearly state where he or
she should be in the future. We also support individual growth through interviews.
Lawson promotes diversity with the aim of assembling employees with widely varied values who join together andperform to their full potential to strengthen its franchise chain further. We have constructed systems for promoting diversity
and inclusion under the direction of the President, established a special subsidiary to promote employment of people withdisabilities, developed childcare facilities in our workplaces, and opened offices for conducting labor management
consultations with a focus on improving operating efficiency and work environments. In recruiting activities, we disregard
gender, nationality, age, school, and origin, focusing instead on individual suitability, motivation, and ability. To promote
active roles for diverse human resources, we introduced a flexible full-time (limited work location) employee systemdesigned for compatibility with obligations such as childcare, long-term care and cancer treatment; established a remote
work system for all employees; and introduced an active full-time senior employee system, raising our employee retirement
age to 65 effective March 2021. These measures will help transform Lawson into a company whose employees can continue
working with satisfaction.
For details of our human resources development policy, internal education policy, etc., including our efforts to ensure
diversity, please refer to our website.
https://www.lawson.jp/en/about/hrs/diversity/<Principle 2-6 Demonstration of Function as a Corporate Pension Asset Owner>
The Company has introduced a defined-contribution pension plan that is administered and managed by a trust bank. In
addition to endeavoring to mitigate future risk from a business account perspective, we are committed to enabling each andevery one of our employees to invest their assets in a way that matches their respective life plans. To that end, we consult
with the trust bank before selecting products and offering them to our employees. Furthermore, to prevent employees being
disadvantaged if they forget to select investment products when enrolling in the scheme, we have prescribed specified
investment methods.

<Principle 3-1 Voluntary Information Distribution>(1) Company business principles, business strategies and business plans
The Company has formulated its group philosophy as a basis for all its corporate activities.
[Group Philosophy]“Creating Happiness and Harmony in Our Communities”
Furthermore, under this group philosophy, the Group has set a new vision in order to clarify its goal and orient all5Lawson, Inc.

CORPORATE GOVERNANCE
business activities toward these goals.
[Vision]“Our goal is to become the hub of refreshment in every community.”At the same time, in order to succeed this vision, we also have revised Lawson's way (action guideline) to clarify theactions required for the individual and to move forward with everyone united.
[Lawson's Way (Action Guideline)]
1.

Create stores filled with the best smile in town.

2.

Speak out your ideas to take action.

3.

Enjoy your challenge.

4.

Value your friends to become one.

5.

Act in good faith.

For details of our business strategy, please refer to our integrated report.
https://www.lawson.jp/en/ir/library/annual_report/2021/(2) Basic views and guidelines on corporate governanceFor our basic views and guidelines on corporate governance, please refer to I.1 “Basic Approach” in this report.

(3) Board policies and procedures in determining the remuneration of directors
For the Company’s policies concerning remuneration for directors and corporate auditors, please refer to section II.1
“Matters Related to Compensation for Directors” in “Disclosure of the Policy on Deciding the Amount of Remuneration
or its Calculation Method,” in this report.

(4) Basic views on composition of Board of Directors and policies in the appointment of officers
The Company has established Officer Selection Standards to serve as criteria when appointing director and corporate
auditor candidates, and we have appointed persons who have different expertise and experience as director candidates so
as to ensure the diversity of the Board of Directors as a whole as well as appropriate decision making and supervision.
Furthermore, in addition to “Independence Standards” determined by the Tokyo Stock Exchange, Inc., we have established“Criteria for Determining Independence” and appointed several independent officers who are unlikely to develop conflictsof interests with ordinary shareholders in order to strive to make clear about the transparency and fairness of management.
More than one-third of the member of Board of Directors shall be independent officers.
Regarding the number of directors, the number of directors is limited to eleven persons in our company, and we will
establish a framework that allows both the adequate consideration at the Board of Directors and the maintenance of themobility of the inquiries while by introducing the executive officer system, we can categorize management decisionmaking and supervision and business execution and establish a system that enables quick decision making and businessexecution.

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CORPORATE GOVERNANCE
Regarding Corporate Auditors, we appoint persons with knowledge and expertise such as finance, accounting, risk
management, law necessary for audit duties.

<Officer Selection Standards and Procedures>
Based on the above policy, we select candidates for officers in accordance with the following Officer Selection Standards.
In addition, candidates for outside directors are those who do not violate the following Criteria for Determining Independence.
Furthermore, we established the Nomination and Compensation Advisory Committee to declare candidates for directors andrepresentative directors to the Board of Directors. If, after taking up their post, a director or representative director has
seriously damaged the value of the Company or no longer meets the Officer Selection Standards, the committee is consulted
on whether to dismiss the officer concerned.

<Officer Selection Standards>
・Have a strong affinity with the group philosophy of “Creating Happiness and Harmony in Our Communities”
・Have the ability to contribute to delivering sustainable growth to the Group and increasing its corporate value
・An absence of mental or physical health problems that would hinder their ability to perform their duties
・Popularity, dignity, and impeccable ethics
・Have objective decision-making abilities and gifted with both foresight and insight・Have extensive experience and insight in such as corporate management and specialized fields
・Be able to secure enough time to do the job line
・Not disqualified under the Companies Act
・Regarding independent officers, not conflict with “Criteria for Determining Independence”<Criteria for Determining Independence>
・A person or person who works for a party for whom the Group is an important business partner
Refers to the case of a business-partner group that supplies products or services to the Group where the amount ofbusiness conducted between the Group and the business-partner group in the preceding business year was 2% or moreof the business-partner group’s consolidated sales
・A person who is an important business partner of the Group or person who works for a party that is an important business
partner of the Group
Refers to the case of a business-partner group to which the Group supplies products or services where the amount ofbusiness conducted between the Group and the business-partner group in the preceding business year was 2% or moreof the Group’s consolidated sales (gross operating revenue)
・A consultant, accounting specialist, or legal specialist who receives large amounts of money or other assets other thanofficer compensation from the Group
Refers to a consultant, accounting specialist such as a certified public accountant, or legal specialist such as an attorney
who receives money or other assets other than officer compensation from the Group and has received 5 million yen or7

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CORPORATE GOVERNANCE
more per year in each of the past two years from the Group・A major shareholder of the Company (if the shareholder is a corporation, a person who works for that corporation)
・A close relative of the person works for the Group・A close relative of the person is a non-executive director or an accounting advisor of the Group (if the independent
officer is an outside corporate auditor)
・A person who, at the time of reappointment, has served for a total of more than eight years as an outside director or 12
years as an outside corporate auditor. Even if any of the above apply, if the person concerned is deemed by the Boardof Directors to be effectively independent, that person may be selected as an independent outside-officer candidate. In
such a case, the reasons shall be explained and disclosed at the time of their appointment as an outside officer.

(5) Explanations of each appointment/nomination when the Board of Directors appoints nominates director andcorporate auditor candidates based on (4) above
The Company includes the reasons for selecting director and corporate auditor candidates in convocation notices forshareholders’ meetings<Supplementary Principle 3-1(3): Sustainability Initiatives, etc.>(Sustainability initiatives)
The Company has been promoting its business activities from the customer’s point of view in order to become the hubof refreshment in every community based on its Group philosophy, “Creating Happiness and Harmony in Our
Communities.” In creating happiness in our communities, it is essential to realize a sustainable society for the future and tocoexist synergistically with our stakeholders. In order to create a prosperous future for our children, the Lawson Group has
established the Lawson Group Sustainability Policy based on the Lawson Group Corporate Conduct Charter and has beenpromoting sustainable business activities in collaboration with its stakeholders. On March 1, 2021, we established theposition of Chief Sustainability Officer (CSO), which was assumed by the President and CEO and representative director.
We also established the SDGs Promotion Department as a dedicated department to further strengthen our initiatives with a
new structure. In responding to issues, the SDGs Committee periodically identifies issues that align with the Three
Promises and shares the progress of the entire Group, while each division conducts self-directed initiatives in its own
business activities. Furthermore, we have established working groups under the SDGs Committee to strengthen our
initiatives on key issues that require a quick response; namely, CO2 emissions reduction, food loss reduction, plastic
reduction, supply chain expansion, and information disclosure.
For details of sustainability initiatives, please refer to “Environmental Protection and CSR Activities” in section 3“Approach for Respecting the Position of Stakeholders” in this report.

To sustain the blessings of the Earth for future generations, the Lawson Group will consider the environment in every
aspect of our business activities and strive to achieve sustainable development and coexistence with local communities. We

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CORPORATE GOVERNANCE
have made coexistence with local communities and striving to achieve sustainable development basic principles of ourLawson Group Environmental Policy. Furthermore, in determining the Group’s material issues, we consider the issue ofclimate change, which is becoming more severe year by year, to be an extremely important issue. As the core company of
the Lawson Group, Lawson endorsed the Task Force on Climate-related Financial Disclosures (TCFD) in April 2020, andwe are following its recommendations to promote disclosure of information on governance, strategy, risk management, andmetrics and targets.

(Investment in human capital and intellectual property)
In order to realize its Group philosophy, “Creating Happiness and Harmony in Our Communities,” the Company upholds
the Three Promises: “Superior taste,” “Human kindness,” and “Environmental (Machi) friendliness.” In term of “Humankindness,” we will support health promotion and active roles for all people and provide comfortable work environments
leading to job satisfaction for everyone who works at Lawson. In addition, while working on the promotion of diversity andrealization of a work-life balance to create comfortable workplace for all employees, we have established a rewarding work
reformation project under the Lawson Group Sweeping Transformation Executive Committee, which is implementing
initiatives for achieving Challenge 2025, to change evaluation systems, support a spirit of challenge, consider job-specificsystems, and use remote working. By realizing these initiatives, we will endeavor to achieve sustainable growth for theCompany and increase corporate value. In the unified use of the Group data project under the same Lawson Group
Sweeping Transformation Executive Committee, we are promoting the utilization of the Group’s membership base forenhancing customer satisfaction, such as Ponta membership and Lawson online members, which are the Group’s intellectual
capital. At the same time, we aggressively invest in digital technology for boosting store productivity, including selfcheckout registers, the LAWSON Smartphone Checkout service, and POS cash registers with an automatic change
dispenser. We recognize that the maintenance and enhancement of the value of our intellectual property, such as trademarks
and brands, is indispensable for the sustainable growth of the Company and the creation of value for society. Accordingly,
we will acquire and maintain intellectual property rights in Japan and overseas, and promote the protection of intellectual
property by taking prompt and strict measures against counterfeits and other products and services that damage such value.
In addition, we will actively disclose our investments in achieving related goals.

<Supplementary Principle 4-1 (1): Overview of Scope of Matters Delegated to Management by the Board of Directors>
The Company specifies matters that require a resolution of the Board of Directors in its rules for the Board of Directors,
guidelines for matters that require discussion by the Board of Directors, and so on, and has also deemed that mattersprescribed by law or in its articles of incorporation, as well as important matters concerning the Company and Group
companies, be decided by resolution of the Board. Furthermore, in 2002, we introduced an executive officer system withthe aim of clarifying management responsibilities and speeding up decision-making through the delegation of authority.
Under this system, matters concerning business execution other than those stipulated in the rules for the Board of
Directors are delegated to the Executive Committee, which comprises personnel who are generally of executive
managing officer level or above and members designated by Representative Director and President.

9Lawson, Inc.

CORPORATE GOVERNANCE<Supplementary Principle 4-1 (3): Chief Executive Officer Succession Planning>
The Company regards succession planning for the chief executive officer as an important management task, and withthe aim of making the procedures more objective, timely, and transparent, this matter is discussed by the Nomination andCompensation Advisory Committee, an advisory organ to the Board of Directors that comprises only part-time officers(there are 7 members, 6 of whom are independent officers). The committee has prescribed the following qualities andattributes required of the Company’s chief executive officer, and the representative director and president has madesuggestions to the committee concerning the development of successors, the method of nomination, etc., and thecommittee has accepted these suggestions.

[Qualities, attributes, etc. required of the Company’s chief executive officer](1) Ability to respond to and engineer change
To ensure the continuation of the convenience-store business, which is part of the societal infrastructure, it is essential
to respond with a sense of urgency to the constantly changing external environment and needs of society and customers.
Furthermore, the ability to unearth new needs among customers and society and to deploy innovation to engineer change
is vital.
(2) Strong leadership
To maintain and elevate the chain’s brand, the exercise of strong leadership toward not only employees but also tostores throughout the country is critical.
(3) High-level communication skills
The person at the top of the Company needs to provide explanations to shareholders, investors, the media, etc. and tocommunicate information to the outside world. They also require high-level communication skills in order to ensure that
store owners nationwide fully understand our management policy and Group philosophy.
(4) Broad perspectives for viewing the Group as a whole and strong commitment to governanceTo contribute to management at the consolidated level, it is essential to maintain a broad perspective for pursuing total
optimization for the Group as well as a strong commitment to promoting disciplined Group governance.
(5) Impeccable ethics
As the chief executive officer of a listed company, which could almost be described as a public institution, and as the
top leader of a convenience-store chain, they need to act in good faith and with impeccable ethics in any event that arises.
Note that no hard and fast attributes for successors are specified. For example, they could be people from inside theCompany or outside the Company.

<Principle 4-9: Independence of Independent Outside Directors and Criteria for Determining Independence in Practice>
Described in “(4) Basic views on composition of Board of Directors and policies in the appointment of officers” above.

10

Lawson, Inc.

CORPORATE GOVERNANCE<Supplementary Principle 4-10(1): Views on Independence of Nomination and Compensation Advisory Committee andthe Committee’s Authority, Roles, etc.>
The voluntarily established Nomination and Compensation Advisory Committee serves as an advisory body that
expresses its opinion to the Board of Directors regarding nominations of candidates for the positions of member of theBoard and representative director. All seven (7) of the Committee members are non-executive members of the Board or
part-time outside corporate auditors, and six (6) of them are independent officers. This ensures that the Committee can
express its opinion to the Board of Directors regarding nominations of candidates for the positions of member of theBoard and representative director based on a high degree of independence.

<Supplementary Principle 4-11(1): Views on the Balance of Knowledge, Experience, and Skills of the Board of
Directors as a Whole and the Diversity and Size of the Board of Directors>
Please refer to “(4) Basic views on composition of Board of Directors and policies in the appointment of officers,”"Officer Selection Standards."
As of May 26, 2021 there are 7 directors (of which 3 are independent directors) and 5 corporate auditors (of which 3
are independent corporate auditors). Furthermore, we are aggressively promoting women to officer positions, and as of
May 26, 2021, there are 6 female officers (3 directors, 3 corporate auditors).
In addition, in order to ensure the optimal composition of the Board of Directors for the Company, we have been
disclosing the main areas of experience and expertise of directors and corporate auditors (skills matrix) in the convocation
notices for general meetings of shareholders starting in 2021. In August 2021, we reviewed the categories and disclosed
the skills matrix in the integrated report.
https://www.lawson.jp/en/ir/stock/stockholder.html
https://www.lawson.jp/en/ir/library/annual_report/2021/<Supplementary Principle 4-11(2): Concurrent Service by Directors and Corporate Auditors>
We disclose information on directors and corporate auditors of the Company who hold concurrent posts as officers ofother listed companies in convocation notices for shareholders’ meetings.
Information on directors and corporate auditors of the Company who held important concurrent posts as of the date
this report was updated is presented in “Matters Related to Directors” and “Matters Related to Corporate Auditors” insection II.1 of this report.

<Supplementary Principle 4-11(3): Overview of Analysis/Evaluation of the Effectiveness of the Board of Directors asa Whole>With the aim of ensuring the effectiveness and enhancing the functions of the Board of Directors, the Company haveall of the Directors and Corporate Auditors perform a “self-evaluation of the effectiveness of the Board of Directors.”
After receiving responses from all directors and corporate auditors, the responses are compiled and analyzed accordingly.
Based on the self-evaluations in FY2020, there were no comments on material deficiencies and it was concluded that the11Lawson, Inc.

CORPORATE GOVERNANCE
current Board of Directors of the Company is operating effectively in making resolutions concerning important businessmatters and in supervising business execution in an appropriate fashion, and this view was shared with and discussed by
the Board. Constructive improvement requests to ensure further effectiveness of the Board were also presented to anddiscussed by the Board. Going forward, we will be taking these opinions into account to make improvements that willlead to the Board becoming even more effective. Furthermore, the objectivity of the results of self-evaluation analyses is
ensured by making use of an external organization about once every three years.

<Supplementary Principle 4-14(2): Policy on Training for Directors and Corporate Auditors>
The Company provides directors and corporate auditors with opportunities to undertake the training they need toperform their roles and duties. We also provide directors and corporate auditors with internal and external training
opportunities relating to the roles, responsibilities, etc. required for the Company to make decisions as necessary. Nonexecutive directors and outside audit & supervisory board member (part-time), meanwhile, are provided with
opportunities to acquire essential knowledge concerning the operations, finances, organization, etc. of the Company.
Furthermore, to enable them to deepen their understanding of the Group’s business, they are given the opportunity toparticipate in key events such as conferences to announce Company policy and to tour Group-related facilities. The
Company pays the cost of all these activities.

<Principle 5-1: Policy for Systems and Initiatives for Promoting Constructive Dialog with Shareholders>
The Company’s Policy for Systems and Initiatives for Promoting Constructive Dialog with Shareholders is as follows.
(1) Basic approach
The Company acknowledges that to deliver sustainable growth and medium- to long-term increases in corporate value
through value creation, it is essential to obtain the understanding and support of shareholders and investors.
To that end, we endeavor to disclose information in an appropriate, timely, and fair manner, and intend to engage inconstructive dialog with shareholders and investors in order to build long-term trust with them.
(2) IR structure
The President is responsible for dialog with shareholders and investors, which is handled by a dedicated IR department
under the purview of the CFO, which works with related departments to proactively disclose information in a highly
transparent fashion.

(3) Methods of dialog
The Company regards shareholders’ meetings as providing important and valuable opportunities for dialog withshareholders, and ensures that there is adequate time at these meetings for questions and answers. (However, such time
may be reduced in order to prevent the spread of COVID-19 infections.) We also hold earnings briefings twice a year. At
these meetings we provide analysts and institutional investors with information on matters such as our operating results
and business strategy. Furthermore, our website contains a dedicated IR section where we provide individual investors
and overseas investors with easy-to-understand information on our operating performance, businesses, management12

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policies, monthly performance, and so on. Moreover, the President, CFO, and IR department proactively visit institutional
investors both in Japan and overseas and respond to individual requests from journalists for information. (However,
online meetings may be held in order to prevent the spread of COVID-19 infections.)(4) Feedback to Company executives
When necessary, details of dialogs with shareholders and investors are provided to the President and other executives.

(5) Inside information and quiet periods
In our dialogs with shareholders and investors, we do not reveal inside information (important matters that have yet tohave been announced publicly). With the aim of ensuring fairness and preventing the leakage of operating results, wehave a quiet period each quarter.

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Proportion of Lawson’s shares held by non-residents

10% or more and less than 20%[Status of Major Shareholders]Name

Number of Shares Held

Mitsubishi Corporation
The Master Trust Bank of Japan, Ltd. (Trust account)
Custody Bank of Japan, Ltd. (Trust account)
KDDI CORPORATION
NTT DOCOMO, INC.
STATE STREET BANK WEST CLIENT - TREATY 505234
Employee Ownership
Custody Bank of Japan, Ltd. (Trust account 7)
Japan Securities Finance Co., Ltd.
Custody Bank of Japan, Ltd. (Trust account 5)

Controlling Shareholder (Exclude Parent Company)

Ratio (%)

50,150,100

50.12

5,119,400

5.12

2,886,500

2.88

2,110,000

2.11

2,092,000

2.09

1,433,788

1.43

844,103

0.84

812,700

0.81

799,000

0.80

790,300

0.79

None
Mitsubishi Corporation

Parent Company(Stock Listings: Tokyo) (Securities Code) 8058

Supplementary Explanation
Nothing to report

Stock Exchange Listings

Tokyo Stock Exchange (First Section)

Accounting Settlement

February

Business Type

Retail business(Consolidated) Number of Employees at End of Last
Fiscal Year

Over 1,000(Consolidated) Sales for Last Fiscal Year

Over 100 billion yen and less than 1 trillion yen

Number of Consolidated Subsidiaries at End of Last
Fiscal Year

Over 10 companies and less than 50 companies

14

Lawson, Inc.

CORPORATE GOVERNANCE

As a listed company, we ensure certain independence. Even in transactions with parent company, Mitsubishi
Corporation, and its group companies, we have determined their terms and conditions like other general transactions
after considering prices of other companies and actual prices of the market to not give disadvantages to minority
shareholders. At least one-third of the members of the Board of Directors are outside directors elected independently of
the Company’s controlling shareholders in accordance with Supplementary Principle 4-8(3).

Mitsubishi Corporation is its parent company that currently holds 50.2% of its total voting rights (50,150 thousand
shares). Although we have a business alliance with Mitsubishi Corporation, we independently make decisions on
management and overall business activities by our institution, conduct business management and ensure independence
as a listed company. Under the business alliance agreement signed with Mitsubishi Corporation, a business alliance that
respects Lawson’s independence and subjectivity is agreed, and remain of independence from its parent company is also
recognized.

15

Lawson, Inc.

CORPORATE GOVERNANCEII Business Management Organizations Associated with Management Decisionmaking, Execution and Supervision, and Status of Other Corporate
Governance Systems
1.
Type of Organization

Company with Corporate Auditors[Matters Related to Directors]
Number of Directors under the Articles of Incorporation

11

Term of Directors under the Articles of Incorporation

1 yearChairperson of the Board of Directors

President

Number of Directors

7

Election of Outside Directors

Yes

Number of Outside Directors

3

Number of Outside Directors that are Appointed as
Independent Directors

3

Relationship with Lawson (1)NameAttribute

Relationship with Lawson (*)

a
b
c
d
e
f
g
h
i
j
k
Keiko Hayashi
Originally from another company
Miki Iwamura
Originally from another company
Satoko Suzuki
Scholar* Conditions met regarding the relationship with Lawson* ○ denotes that an item currently applies to the person, and △ denotes that it applied in the past
* ● denotes that an item currently applies to a close relative of the person, and ▲ denotes that it applied in thepasta.
Executive officer of the listed company or subsidiary thereofb.
Executive officer or non-executive director of parent company of the listed companyc.
Executive officer of a fellow subsidiary of the listed companyd.
A person for whom the listed company is a key business partner, or an executive officer thereofe.
A key business partner of the listed company, or an executive officer thereoff.
A consultant, accounting expert or legal expert who receives substantial money or other property from thelisted company other than officer compensationg.
A major shareholder of the listed company (if the major shareholder is a corporation, an executive officer ofthe corporation)h.
An executive officer (only the actual person) of a business partner of the listed company (which does not fallunder d,e or f)i.
An executive officer of a company with a relationship of mutual appointment of external directors (only the16Lawson, Inc.

CORPORATE GOVERNANCE
j.
k.

actual person)
An executive officer of a party to which the listed company makes donations (only the actual person)
OthersRelationship with Lawson (2)

Name

Keiko
Hayashi

Independent
Director○

Supplementary
Explanation to
Corresponding Item
President and CEO,DoCLASSE the Store, Co., Ltd.

President and CEO,DoCLASSE Co., Ltd.
President and CEO,IMA Holdings
President and CEO,fitfit Co., Ltd.
President and CEO,IMA People Co., Ltd.

Miki
Iwamura○Vice President, Asia-Pacific,
Japan (Marketing),
Google Japan LLC

17

Reason for Selection as Outside Director
Possesses extensive experience and knowledge as acorporate manager, and is currently conducting
appropriate supervision of Lawson’s management.
Furthermore, she is highly independent, as shedoesn’t violate any of the independence standards
prescribed in the Guidelines for Managing Listings
etc. or any of the Company’s Criteria for
Determining Independence. She has therefore been
designated by the Company’s Board of Directors as
an independent officer who is unlikely to have aconflict of interest with ordinary shareholders andwho will supervise the Company’s managementfrom an independent standpoint.
Possesses extensive experience and knowledge as avice president at a global IT company, and iscurrently conducting appropriate supervision of
Lawson’s management.
Furthermore, she is highly independent, as shedoesn’t violate any of the independence standards
prescribed in the Guidelines for Managing Listings
etc. or any of the Company’s Criteria for
Determining Independence. She has therefore been
designated by the Company’s Board of Directors as
an independent officer who is unlikely to have aconflict of interest with ordinary shareholders andwho will supervise the Company’s managementfrom an independent standpoint.

Lawson, Inc.

CORPORATE GOVERNANCE
SatokoSuzuki○

Associate Professor,
Hitotsubashi ICS

Possesses extensive knowledge as an academic in
consumer behavior, marketing, brand management,
etc., has served on joint government and privatesector committees that address topics such as“business management based on omotenashi(Japanese-style hospitality)” and “self-rewardmotivated consumption.” She has also publishednumerous papers, presented at academic conferences
on multiple occasions, and received many awards,
and is currently conducting appropriate supervisionof Lawson’s management.
Furthermore, she is highly independent, as shedoesn’t violate any of the independence standards
prescribed in the Guidelines for Managing Listings
etc. or any of the Company’s Criteria for
Determining Independence. She has therefore been
designated by the Company’s Board of Directors as
an independent officer who is unlikely to have aconflict of interest with ordinary shareholders andwho will supervise the Company’s managementfrom an independent standpoint.

The presence or absence of any committee, which corresponds to theNomination Committee or the Compensation Committee

Yes

Establishment Conditions of Committee, Committee Structure and Attribute of Committee Chairperson

Name ofCommittee

Committee
Corresponds to
Nomination
Committee
Committee
Corresponds toCompensation
Committee

Nomination andCompensation
Committee
Nomination andCompensation
Committee

All
Members

Full-timeMembers

Internal
Directors

OutsideDirectors

OutsideEmployed
PersonOther

Committee
Chairperson

7

0

1

3

0

3

Other

7

0

1

3

0

3

Other

Supplementary Explanation
The nomination and compensation committee were held 4 times in FY2020. In which, it made a proposal to Board of
Directors regarding to compensation for Board of Directors and nomination of executive officers.

18

Lawson, Inc.

CORPORATE GOVERNANCE[Matters Related to Corporate Auditors]
Establishment of the Board of Corporate
Auditors

Yes

Number of Corporate Auditors under the
Articles of Incorporation

5

Number of Corporate Auditors

5

Cooperation between Corporate Auditors, the Certified Public Accountant and Internal
Auditing Division
Lawson’s corporate auditors cooperate closely with the certified public accountant, Deloitte Touche Tohmatsu
through the following communication and information exchange:
1. Briefing of the audit plan by the certified public accountant

Once per year

2. Receipt of audit reports (including reviews) and explanation materials for the interim period
and the end of the term by the certified public accountant
16 times per year
3. Monitoring of the independence of the certified public accountant
As required
4. Observation of audit by the certified public accountant

As required during each audit

5. Other meetings to exchange information and opinions
As required
Lawson’s corporate auditors cooperate closely with the Internal Audit & Correction Office through the following
communication and information exchange:
1. Briefing on the internal auditing division’s plan for the fiscal year

Once per year

2. Exchange of opinions regarding the content of the internal audit report

For each internal audit report

3. Exchange of information regarding the status of internal controls

As required(nearly once per month)Election of Outside Corporate Auditors

Yes

Number of Outside Corporate Auditors

3

Number of Outside Corporate Auditors that are
Appointed as Independent Corporate Auditors

3

Partnership with Lawson (1)NameAttribute

Relationship with Lawson (*)
a

Eiko Tsujiyama
Yuko Gomi
Keiko Yoshida

ScholarLawyerCertified Public Accountant* Conditions met regarding the relationship with Lawson

19

b

c

d

e

f

g

h

i

j

k

l

m

Lawson, Inc.

CORPORATE GOVERNANCE* ○ denotes that an item currently applies to the person, and △ denotes that it applied in the past
* ● denotes that an item currently applies to a close relative of the person, and ▲ denotes that it applied in thepasta.
Executive officer of the listed company or subsidiary thereofb.
Non-executive director or accounting advisor of the list company or subsidiary thereofc.
Executive officer or non-executive director of parent company of the listed companyd.
Auditor of the parent company of the listed company
e.
Executive officer of a fellow subsidiary of the listed companyf.
A person for whom the listed company is a key business partner, or an executive officer thereofg.
A key business partner of the listed company, or an executive officer thereofh.
A consultant, accounting expert or legal expert who receives substantial money or other property from thelisted company other than officer compensationi.
A major shareholder of the listed company (if the major shareholder is a corporation, an executive officer ofthe corporation)j.
An executive officer (only the actual person) of a business partner of the listed company (which does not fallunder f,g or h)k.
An executive officer of a company with a relationship of mutual appointment of external directors (only theactual person)l.
An executive officer of a party to which the listed company makes donations (only the actual person)m. Others

20

Lawson, Inc.

CORPORATE GOVERNANCE
Partnership with Lawson (2)Name

Independent
Director

Eiko Tsujiyama○

Yuko Gomi○

Keiko Yoshida○

Supplementary Explanation
to Corresponding Item

Reason for Selection as Outside
Corporate Auditor

Possesses a Certified Public Accountant qualificationand serves as a member of the National Tax Councilof the National Tax Agency and the BusinessAccounting Council of the Financial Services Agency
as an academic; has a considerable degree ofknowledge of finance and accounting as an emeritus
professor of accounting; and is currently conducting
appropriate audits of the roles and responsibilities of
directors.
Furthermore, she is highly independent, as she doesn’t
violate any of the independence standards prescribedin the Guidelines for Managing Listings etc. or any oftheCompany’s
Criteria
for
Determining
Independence. She has therefore been designated by
the Company’s Board of Directors as an independent
officer who is unlikely to have a conflict of interest
with ordinary shareholders and who will supervise theCompany’s management from an independent
standpoint.
Possesses a qualification as a lawyer, is involved in
Lawyer with no businesslegal and risk management duties, mainly in the field
relationship with Lawsonof corporate law, and she is currently conducting
appropriate audits of the roles and responsibilities of
directors.
Furthermore, she is highly independent, as she doesn’t
violate any of the independence standards prescribedin the Guidelines for Managing Listings etc. or any oftheCompany’s
Criteria
for
Determining
Independence. She has therefore been designated by
the Company’s Board of Directors as an independent
officer who is unlikely to have a conflict of interest
with ordinary shareholders and who will supervise theCompany’s management from an independent
standpoint.
Certified Public Accountant, Possesses a Certified Public Accountant qualificationand serves as representative of an accounting firm; has
Certified Public Tax
Accountant with no business a considerable degree of knowledge of tax,
accounting, and business administration; and isrelationship with Lawson
currently conducting appropriate audits of the roles
and responsibilities of directors.
Furthermore, she is highly independent, as she doesn’t
violate any of the independence standards prescribedin the Guidelines for Managing Listings etc. or any oftheCompany’s
Criteria
for
Determining
Independence. She has therefore been designated by
the Company’s Board of Directors as an independent
officer who is unlikely to have a conflict of interest
with ordinary shareholders and who will supervise theCompany’s management from an independent
standpoint.
Professor Emeritus,
Waseda University21Lawson, Inc.

CORPORATE GOVERNANCE[Matters Related to Independent Directors and Corporate Auditors]
Number of Independent Directors and Corporate
Auditors

6

Other Matters Related to Independent Directors and Corporate Auditors
Nothing to report[Matters Related to Incentives]
Status of Implementation of Measures for the
Granting of Incentives to Directors

Introduction of Stock Options Program
Introduction of Performance Pay System

Supplementary Explanation Associated with the Relevant Item
Please refer to section II.1 [Matters Related to Compensation for Directors] “Disclosure of the Policy on Deciding
the Amount of Remuneration or its Calculation Method” in this report.

Recipient of Stock Options

In-house directors, outside directors, others

Supplementary Explanation Associated with the Relevant Items
Stock options are granted to in-house directors, outside directors and senior vice presidents to share not only the
merit of the rise in stock price but also the risk of decline in stock price with shareholders in order to raise themotivation and morale to raise stock prices and improve performance.
[Matters Related to Compensation for Directors]
Scope of Disclosure (of Individual Compensation
for Directors)

Only partial individual disclosure

Supplementary Explanation Associated with the Relevant Item
In total 9 directors received paid compensation in FY2020 of 252 million yen, including 4 outside directors who
received 34 million yen.
The above compensation amount consists of the following remuneration in relation to FY2020:(1) Basic compensation paid in FY2020
150 million yen (116 million yen of fixed compensation and 33 million yen of variable compensation) to 5
directors
30 million yen (30 million yen of fixed compensation) to 4 outside directors(2) Stock option remuneration
68 million yen to 5 directors
4 million yen to 4 outside directors

22

Lawson, Inc.

CORPORATE GOVERNANCE
Furthermore, the total compensation of which consolidated compensation is over 100 million yen is individually
disclosed in the Annual Securities Report.

Policy on Deciding the Amount of Remuneration
or its Calculation Method

Yes

Disclosure of the Policy on Deciding the Amount of Remuneration or its Calculation Method
Decision-making process and policy for the amount of remuneration paid to directors.
(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 forthe enhancement of corporate value, sustainable growth and improvement of operating performance, and reward eachdirector with a sufficient and adequate amount of compensation for the execution of their duties.

(2) Decision-making process for the amount of remuneration paid to directors
In order to enhance management transparency, the amount of remuneration paid to directors is determined at theboard of directors meeting based on recommendations by the Company’s Compensation Committee, which consists
exclusively of non-executive directors and outside audit & supervisory board members (part-time).
Based on “interviews on performance evaluation”, “interviews on goal setting for next fiscal year” and “discussions
on basic compensation and performance evaluation of the Company’s directors” which the Company’s Compensation
Committee conducts, the board of directors meeting determines the amount of individual remuneration paid to
directors.
Members of the Nomination and Compensation Committee:
Committee Chairperson:

Eiko Tsujiyama (Outside Corporate Auditor)

Vice Committee Chairperson:

Keiko Hayashi (Outside Director)

Committee member:

Miki Iwamura (Outside Director)
Satoko Suzuki (Outside Director)
Kiyotaka Kikuchi (Director)
Yuko Gomi (Outside Corporate Auditor)
Keiko Yoshida (Outside Corporate Auditor)(3) Details of remuneration paid to directors
Remuneration paid to the Company’s directors is composed of basic compensation through monthly cash payments
and stock price-linked compensation through the granting of stock options.
[Basic compensation]23

Lawson, Inc.

CORPORATE GOVERNANCE
Basic compensation of directors is composed of fixed compensation with fixed monthly payments and variable
compensation, which fluctuates in response to the Company’s financial performance for each period.
1) Fixed compensation (60% of the total)
The amount of fixed compensation commensurate with the position is determined based on standards stipulated byinternal rules.
2) Variable compensation (40% of the total)
In order to link the remuneration of directors with shareholder returns, the Company has adopted a compensation
system that is linked to the Company’s financial performance.
Variable compensation is paid in accordance with the degree to which targets for EPS (earnings per share) and yearon-year increase in total price mark-up (gross profit) at existing stores. The final amount of variable compensation isdetermined after adding a qualitative component (10%) based on an evaluation performed at a meeting with theNomination and Compensation Committee.
As a result of the review of some KPIs in the 47th term, KPIs will be determined based on the percentage of budget
achievement for "EPS" and "SDGs targets (CO2 reduction rate, etc.)".
The EPS targets are aimed at better sharing value with shareholders and linking this to the Company’s operating results,
while the SDGs targets are aimed at achieving the Company’s environmental vision of “Lawson Blue Challenge 2050!”
Regarding 4 non-executive directors, Keiko Hayashi, Miki Iwamura, Satoko Suzuki, and Kiyotaka Kikuchi, variable
compensation is not applicable as they are focused on their supervisory and advisory roles as the Company’s
representative directors and in the board of directors meetings.

[Stock price-linked compensation]
Stock options as stock-based compensation
By incorporating stock options as stock-based compensation linked with stock prices as part of compensation paid to
directors, the Company has a system in which management shares with stockholders the benefits from a rise in stock
price as well as the risks associated with a price decline. The Company positions stock options as compensation thatis linked to medium to long-term improvement of its corporate value.
Exercise price on stock options as stock-based compensation is ¥1 per share and the number of units granted, which
is determined in accordance with the position of directors, is adjusted up or down by multiplying it by the percentageof the EPS target achieved. In addition, stock options as stock-based compensation can be exercised only during
designated periods after retirement from office; directors are not allowed to exercise their stock option rights during
their term in office.

(4) Limit on the amount of remuneration paid to directors
The limit on the amount of remuneration paid to the Company’s directors is determined at the general meeting ofshareholders in accordance with laws and regulations.
1) Amount of remuneration paid to directors

24

Lawson, Inc.

CORPORATE GOVERNANCE
Resolutions at the general meeting of shareholders as of May 24, 2001: 400 million yen or less per year
2) Amount of stock options granted to directors
Resolutions at the general meeting of shareholders as of May 27, 2014: 300 million yen or less per year

Policy on Decisions Concerning the Amount of Remuneration Paid to Corporate Auditors
1)

Basic policy on decisions concerning the amount of remuneration paid to corporate auditors

Regarding the amount of remuneration paid to corporate auditors, it is the Company’s basic policy to reward eachcorporate auditor with a sufficient and adequate amount of compensation for the execution of their duties.
2)

Decision-making process for the amount of remuneration paid to corporate auditors

The amount of remuneration paid to corporate auditors is determined based on discussions among corporate auditors
and is within the remuneration amount limit resolved at the general meeting of shareholders.
3)

Details of remuneration paid to corporate auditors

The Company’s corporate auditors receive basic compensation (fixed compensation) in cash.
The amount of basic compensation is decided based on discussions among corporate auditors, taking into
consideration whether or not they are working on a full-time basis, and segregation of auditing duties. Regarding
retirement benefits, the system itself was abolished.
4)

Limit of the amount of remuneration paid to corporate auditors

The limit of the amount of remuneration paid to the Company’s corporate auditors is determined at the general meetingof shareholders in accordance with laws and regulations.
Amount of remuneration paid to corporate auditors
Resolutions at the general meeting of shareholders as of May 27, 2020: 100 million yen or less per year

[Support System for Outside Directors (Outside Corporate Auditors)]
The staff of the Board of Directors is in charge of administrative tasks and communicating with the outside directors.
Further, in the event of any incident or accident, the staff submits a report to the directors in each case. The
Corporate Auditors Office supports the corporate auditors and 2 full-time staffs are assigned. The staff members arein charge of assisting audit operations, administrative tasks and communicating with outside corporate auditors.
In order for independent outside directors to actively contribute to discussions at the Board of Directors’ meetings,
the Company holds meetings to exchange opinions with only independent outside directors at least once a year as anopportunity to exchange information and share awareness based on an independent and objective standpoint.

[Details of Persons Who Have Stepped down as Representative Director and President etc.]

Name etc. of Consultant, Advisor etc. Who Is Former Representative Director and President etc.

Name

Post/Status

Description

Form/Conditions of Employment(Full-time or Part-time, Compensated25

Date of
Stepping downTerm of OfficeLawson, Inc.

CORPORATE GOVERNANCE
or Not, etc.)

―

―

―

―

―

Total Number of Consultants, Advisors, etc.

None

Other Matters
Not applicable.

26―

Lawson, Inc.

CORPORATE GOVERNANCE
2.
The Company’s Board of Directors is made up of 7 directors, including 4 males and 3 females, 3 of whom are
independent directors. The Board of Directors not only decides important management matters such as issues stipulated
by laws and regulations and the Articles of Incorporation, but also monitors the conduct of business operations by its
directors. The Board met 13 times in FY2020. Furthermore, the Company has adopted an executive officer system andentrusts authority to executive officers to expedite business execution. Moreover, the Company holds management
council meetings (Executive Committee meetings, Management Strategy meetings) as a supplementary decision-making
body to the Board of Directors. The Management Council is made up of persons who are generally directors, executive
officers and divisional officers (and met 13 times in FY2020).
To ensure the effectiveness of the compliance system and risk management system, the Company has a Complianceand Risk Management Committee. Meanwhile, the Financial Reporting Internal Control Committee oversees
enhancement of internal controls around financial reporting.
Furthermore, in FY2020, the Compensation Advisory Committee headed by committee chairperson Eiko Tsujiyama,
an outside corporate auditor, and vice committee chairperson Keiko Hayashi, an outside director, consisting 6
independent directors out of 7 members was convened 4 times. The committee reported to the Board of Directors on
methods for deciding the compensation of directors and company executive officers.
The Internal Audit & Correction Office, which has 18 members, serves as the Company’s internal audit division andreports directly to the president of the Company. This office conducts business audits, including audits of affiliatedcompanies, to identify problems and also provides guidance for improvements.
The Company has 5 corporate auditors, including 2 males and 3 females, 3 of whom are independent corporate auditors.
Corporate auditors attend meetings of the Board of Directors and other important meetings where they also express theiropinions. They also inspect important documents and conduct other activities in auditing the conduct of duties bydirectors (The Board of Corporate Auditors’ meeting was held 17 times in FY2020).
The Company has signed an audit contract with Deloitte Touche Tohmatsu to conduct financial audits. The Company
is subject to audits in accordance with the Japanese Company Law and the Financial Instruments and Exchange Act.
There are no special relationships involving mutual interests between the certified public accountant (independent
auditor) and the Company. In close liaison with Lawson’s corporate auditors and Lawson, the certified public accountant
issues a report on its planned auditing work for each business period, and subsequently issues regular reports on the
progress of the auditing. During each business period, Lawson’s corporate auditors and the certified public accountant
exchange information and opinions wherever deemed necessary to ensure the efficiency and accuracy of the auditing
process.

27

Lawson, Inc.

CORPORATE GOVERNANCE
3.
Lawson adopts a corporate auditor system, with 5 corporate auditors, including 3 outside corporate auditors (3 of whomare Independent Corporate Auditors), auditing the roles and responsibilities of directors. The Company has 7 directors,
including 4 in-house directors and 3 outside directors, 3 of whom are independent directors. The number of Board
members has been kept to a minimum to speed up the decision-making process. We also appoint outside directors whoare independent officers in order to enable the Company to incorporate insights and knowledge from a broader perspective
where the Company is unlikely to have a conflict of interest with general shareholders, as well as to make appropriate
judgments on important matters related to Company management.

28

Lawson, Inc.

CORPORATE GOVERNANCE
III

Implementation of Measures Associated with Shareholders and Other
Stakeholders

Supplementary Explanation
Early Dispatch of Noticeof Ordinary General
Meeting of Shareholders

For the 46th Ordinary General Meeting of Shareholders, in addition to distributing
the Notice of the Ordinary General Meeting of Shareholders 25 days prior to themeeting, a Notice of Ordinary General Meeting of Shareholders is posted on
Lawson’ s website (an English version is also posted) prior to the date of shipment.

Exercising Voting Rights
by Electronic Means

Company shareholders are able to exercise voting rights by electronic means,
beginning from the 34th Ordinary General Meeting of Shareholders held in 2009 andthereafter.

Participation in Electronic
Voting Platform for
Institutional and Foreign
Investors and Other
Measures to Enhance

Lawson is using the electronic platform for exercising voting rights offered by ICJ,
beginning from the 34th Ordinary General Meeting of Shareholders held in 2009 andthereafter.

Availability of Notice ofGeneral Meeting of
Shareholders (orSummary) in English

An English version of the Notice of Ordinary General Meeting of Shareholders has
been prepared and published on the website, beginning from the 26th Ordinary
General Meeting of Shareholders held in 2001 and thereafter.

OthersLawson endeavors to create a friendly atmosphere at ordinary general meetings ofshareholders, such as by having reception personnel wear the easily recognizable
Lawson store uniform. Furthermore, following the completion of meetings, Lawson
provides details of business reports on its corporate website, as well as releases theresults of voting.

29

Lawson, Inc.

CORPORATE GOVERNANCE

Supplementary Explanation

Explanation
Provided
Directly by the
Representative

Regular explanatory
meeting foranalysts/institutional
investors

In addition to the explanatory meeting at the time of full-year accountsettlement and interim-term account settlement, our directors hold aYestelephone conference at the time of quarterly account settlement toensure timely disclosure is provided directly by the representative.

Posting of IR
documents on
Lawson’s Website

In the interest of fairness of disclosure, we publish the disclosure
information, important information and materials of the explanatory
meeting on our website as soon as is possible. We also actively None
provide disclosure in English for the benefit of foreign investment
institutions and foreign private investors.

Establishment ofdivision to handle
IR (representatives)

We assign IR representatives in charge of Financial Administration―
Division.

30

Lawson, Inc.

CORPORATE GOVERNANCE

Supplementary Explanation
Lawson’s group philosophy is “Creating Happiness and Harmony in Our
Communities.” In order to make this the corporate philosophy of the entire Groupand bring this philosophy to reality, Lawson has set out its basic stance on all
stakeholders in the Lawson Corporate Conduct Charter and this is made available
on the Company’s website.

Internal Charter That
Respects Stakeholders[Establishment of and compliance with the Lawson Group Human Rights Policy]
In June 2021, we established the Lawson Group Human Rights Policy, based on
which we respect human rights in our business activities and build relationships oftrust with all people involved in our business activities through sincere responses.
Anticipating that our customers, business partners, local communities, and otherstakeholders who support our business activities will also support this policy, we willcontinue our efforts to respect human rights through dialogue and consultation withthese stakeholders. In addition to remedies and corrective action, education andtraining, we are committed to building and implementing human rights due diligence.
The policy is based on the United Nations Guiding Principles on Business andHuman Rights and supports international norms on human rights such as theInternational Bill of Human Rights and the ILO Declaration on Fundamental
Principles and Rights at Work.

31

Lawson, Inc.

CORPORATE GOVERNANCE
With the aim of achieving a sustainable society through Lawson’s businessactivities based on our group philosophy, we have established the SDGs
Committee, which has been leading Group-wide efforts to conduct individual
initiatives that solve social issues through our business activities. In addition, inorder to actively promote the initiatives for SDGs with growing importance, on
March 1, 2021, the position of chief sustainability officer (CSO) was establishedand assumed by the President and CEO, Representative Director. We intend tofurther strengthen our initiatives under the new structure.
Specifically, we identified issues having significant impacts on the environment,
society and economy across our business activities including our value chains,
selected specific issues that significantly impact society and the Lawson Group, andidentified the social issues that should be prioritized. We then linked Lawson’s
initiatives to the identified social issues, determined our “6 Material Issues”, andhave been implementing measures.

“6 Material Issues”
1. Providing safety/security-oriented overwhelmingly high value-added products
Environmental Protection
and CSR Activities

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 sixthmaterial 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 acarbon-free society and contribute more to the ideal world that theSDGs aim to realize. To fulfill Lawson’s Vision 2050, we are looking
back on what we have done so far and examining and discussing

32

Lawson, Inc.

CORPORATE GOVERNANCE
what we should do now to steadily proceed with our material issues
and KPIs for 2030. In order to carry out these initiatives with asense of urgency, we have established working groups under the
SDGs Committee to strengthen our initiatives on key issues; namely,
CO2 emissions reduction, food loss reduction, plastic reduction,
supply chain expansion, and information disclosure.
●Measures for reducing CO2 emissions
KPI for 2030: reduce CO2 emissions per store by 50% over 2013
To prevent global warming and reduce electricity consumption at
stores, we have been installing chlorofluorocarbon (CFC)-free (CO2refrigerant) refrigerator/freezer systems. The number of stores
equipped with such systems reached approximately 4,200 as of theend of February 2021, up 500 stores from the end of the previous
fiscal year. Furthermore, Lawson, Inc. endorsed therecommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) in April 2020. To combat worsening climatechange issues, we have analyzed climate-related risks andopportunities and made our second disclosure on our official website
in June 2021. We will further implement scenario analysis on majortransition risks and physical risks, identify their impact on ourbusiness strategies, examine measures to take, and endeavor toproactively disclose information.
●Measures for reducing food waste
KPI for 2030: reduce by 50% over 2018
To reduce food waste, we optimize the number of purchases, offer
discounts to sell out all stock, and reduce unsold leftovers by selling
special feature items on a reservation basis. Meanwhile, we takeleftover food products to recycling plants to have them recycled into
pig and chicken feed or fertilizers for growing vegetables. Oil waste
is also recycled into nutritional additives for feedstuffs and biodiesel.
●Measures for reducing plastic use
KPI for 2030: reduce by 30% over 2017 (50% of materials used for
Lawson’s original product containers and packaging are eco-friendly)33

Lawson, Inc.

CORPORATE GOVERNANCE
To reduce plastic use, we have replaced the plastic cups used for iced
coffee and café latte offered at “MACHI café” with paper cups andadopted lids with openings to eliminate the need for straws.
●Measures for reducing plastic shopping bags
KPI for 2030: reduce by 100%
We started charging fees for plastic shopping bags in response to the
mandatory surcharge implemented nationwide from July 2020, andnow use plastic bags with a mix of 30% plant-derived materials. As aresult of these measures, the percentage of Lawson customers
declining single-use plastic shopping bags is currently 74.9% as ofthe end of February 2021.
We also continued with our scholarship program for children fromsingle-parent families, selecting 400 students to receive scholarships
in fiscal 2020. Since August 2019, Lawson has periodically donatedoriginal 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, whichthen provide them to families who need food aid, children’s
cafeterias, orphanages, facilities for people with a disability, etc. In
fiscal 2020, we donated a total of some 270,000 items (about 30 tons)of food products, including Lawson’s original items and nationallabel products developed exclusively for Lawson.
As a member of society, we will continue to contribute to thepromotion of SDGs through our measures to address social andenvironmental issues together with franchise stores, customers andbusiness partners.

34

Lawson, Inc.

CORPORATE GOVERNANCE

Development of Policies,
etc. for Providing
Information to
Stakeholders

The company published “Basic Principles for Information Disclosure” and the basic
ideas of the disclosure of information to stakeholders in company’s website based on“Basic rules for Information Disclosure” established by Board of Directors andrelevant rules. Furthermore, to comply with relevant regulations, the company
promotes initiatives to stakeholders at Corporate Strategy and Planning Division,
Corporate Communications Division, Franchisee Business Support Division and
Financial Administration Division.

35

Lawson, Inc.

CORPORATE GOVERNANCEIV Matters Relating to the Internal Control System

Based on the status of development and operation of “2020 Basic Policy for Improvement of Internal Control Systems”,
which was resolved at the Board of Directors meeting held on February 17, 2021, the Company passed the resolution
called the “2021 Basic Policy for Improvement of Internal Control Systems” as indicated below.

2021 Basic Policy for Improvement of Internal Control Systems
Lawson is involved in a broad range of business domains, high-end supermarket business, entertainment-related
business, financial services business, e-commerce business, consulting business and advertising business along with its
core convenience store business. Lawson provides multifarious products and services through its immense chain of
stores in every prefecture in Japan in these wide-ranging business domains. In conjunction with these activities, Lawson
is subject to a host of laws and regulations and is also exposed to risks of loss (hereinafter “risks”). Because Lawson’s
convenience store business uses a franchise system, there is a need to provide proper support to a large number offranchised stores. In light of the nature of Lawson’s business, an important theme for management is the maintenanceand operation of internal control systems that can support sound and continuous business growth. Accordingly, Lawson
has established “2021 Basic Policy for Improvement of Internal Control Systems” (hereinafter “Basic Policy”), as
outlined below, in accordance with the Japanese Company Law and its enforcement regulations, as well as the Financial
Instruments and Exchange Act.

The Basic Policy will ensure that Lawson’s businesses are conducted effectively, efficiently and in a proper manner,
ultimately helping to preserve and increase enterprise value.

The Basic Policy is applicable to all company officers (directors, corporate auditors, executive committee members
and other individuals of similar rank; hereinafter the same) and employees (permanent, temporary, contract workers
and other staff members; hereinafter the same).

1.

Systems to Ensure Compliance of the Execution of Duties by Directors and Employees with Laws and Regulations
and the Articles of Incorporation(1)

The Board of Directors shall determine the improvement policies and plans for internal control systems,
including those for compliance with laws, regulations and the like (hereinafter the “Compliance”), and receive
status reports thereof periodically.

(2) The Board of Directors shall maintain and improve the supervising function regarding the execution of duties
by the Directors by electing outside Directors on an ongoing basis.
(3) The Corporate Auditors shall independently audit the execution of duties by the Directors, including the statusconcerning the improvement of the internal control systems.

36

Lawson, Inc.

CORPORATE GOVERNANCE(4) The Board of Directors shall maintain and raise the awareness of officers and employees regarding complianceby thoroughly disseminating the Lawson Group’s Code of Conduct and the Lawson Ethical Mission Statement
by measures including, but not limited to, appointing a Chief Compliance and Risk management Officer andestablishing a department that oversees compliance, assigning personnel in charge of compliance to eachdepartment, streamlining the rules in relation to compliance and providing training on ethics and conducting
compliance awareness surveys on a periodic basis.
(5) The Legal Affairs Department shall be reinforced to fortify foundations for complying with legal requirementsby identifying the laws and regulations applicable to the Company’s businesses and communicating the content
thereof to the relevant departments and sections. Especially for compliance with the Act on Prohibition ofPrivate Monopolization and Maintenance of Fair Trade, Subcontract Act, Act Against Unjustifiable Premiums
and Misleading Representations and other consumer-related laws,

the Intellectual Property Act, the Labor

Standards Act, etc., the Company shall strive to disseminate information about applicable laws and regulations
to employees.
(6) The Internal Audit Department, which is independent from the business executing bodies, shall conduct efficientand effective audits of the status concerning the improvement of the internal control systems, and recommend
improvements thereof, as required.
(7) The Company shall establish and upgrade normal reporting routes for reporting any violations of laws,
regulations or internal rules, and by establishing consulting and reporting point (internal contact points, a groupwide consulting contact point and a consulting contact point for employees and business counterparties for
Lawson’s franchised stores) that fully protect informants, the Company shall strive for early detection ofviolation or possible violation of laws, regulations, etc. across the entire Lawson chain. If a violation of laws,
regulations or internal rules is discovered, the Company shall act promptly to rectify the situation and prevent
recurrences.

(8) The Company shall never become involved with antisocial forces or bodies that threaten the order and securityof society, and shall take a firm stance on and deal with improper demands by consulting with lawyers, thepolice and the like.

(9) The Company shall rotate personnel periodically to prevent wrongdoings resulting from specific employees
monopolizing certain business processes.

2.

Systems to Preserve and Manage Information Pertaining to the Execution of Duties by Directors(1) The Company shall record, preserve and manage information relating to decision making at important meetings
such as those of the Board of Directors and the Management Council, and authorizing documents, including
those approved by the President as well as financial, clerical and risk- and compliance-related information(including information contained in electromagnetic media). Moreover, the Company shall put in place a systemallowing relevant parties to inspect the above information.
(2) The Company shall manage and monitor its information systems in a secure manner, in addition to maintaining
the system by sufficiently taking into account contingencies.

37Lawson, Inc.

CORPORATE GOVERNANCE(3) The Company shall establish and maintain rules regarding the storage and management of documents (including
electromagnetic recording media), keep everyone informed about the responsibility and authority for document
management, document storage periods and management methods, and periodically monitor the status of
document storage and management.
(4) The Company shall establish regulations regarding the safeguarding of personal information and managementof confidential business information, and shall properly and safely store and manage personal information andimportant confidential business information.
(5) The company shall appoint chief information security officer and establish departments to generally control
information security. The company also shall strive to establish information security system for Lawson Groupin order to promote information security risk management and System Technology Security interactively andcomprehensively.
(6) The Company shall establish and maintain rules regarding the disclosure of important Company information,and upgrade the system for disclosing information that must be disclosed according to the requirements of laws,
regulations and stock exchanges, in an appropriate, timely and fair manner.

3.

Rules and Other Systems Regarding Risk Management(1) The Company shall establish a department to oversee risk management, and improve rules related to risk
management and group-wide risk-prevention systems during normal operations. Furthermore, each department
shall identify risks that might have adverse effects on the Company’s management in connection with its businesspurposes, analyze the probability of such risk factors materializing and their impact, and evaluate whether
intensive countermeasures should be taken as part of measures tailored to the nature of risks.
(2) To ensure the effectiveness of risk management, the Company shall establish a specialist committee(“Compliance & Risk Management Committee”), and clarify the authority and responsibility of the committee
and its chairperson. Furthermore, the Company shall endeavor to increase awareness about risk management by
assigning risk management staff to departments and associated companies and conducting risk management
training.
(3) The Company shall develop contingency systems and formulate policy for contingency-response bodies inadvance to prepare for the occurrence or possible occurrence of unanticipated situations or events, which might
have adverse effects on management of the Company, in order to provide a quick response to any actual
occurrence thereof and to take effective measures to prevent a reoccurrence.
(4) The Company shall work to formulate a business continuity plan (BCP) and establish a business continuity
management (BCM) system in order to maintain the life infrastructure functions of convenience stores andminimize the disruption to operations of events that could have a detrimental impact on the Company, including
a major disaster or outbreak of infectious diseases, such as a new strain of influenza. In order to be prepared for
major earthquakes, the Company shall conduct disaster prevention drills three times a year while working to
improve effectiveness of the “Disaster Countermeasure Manuals” and the “BCP Manuals”.

38Lawson, Inc.

CORPORATE GOVERNANCE
4.

Systems to Ensure the Efficient Execution of Duties by Directors(1) The Company shall clarify the functional authority and responsibility of corporate officers and employees for
decision making and execution of business affairs. The Company shall also improve rules for the division ofduties to ensure and encourage more appropriate division of duties and collaboration among organizational
bodies.
(2) The Company shall work to raise operational efficiency by simplifying business processes, streamlining theorganization and making appropriate use of IT.
(3) The Company shall promote digital transformation (DX) through the renewal of IT infrastructure.
(4) In order to promote the proper communication of information and communications between officers andemployees, the Company shall improve systems by which management guidelines and policies are disseminatedto employees by corporate officers, and important field information is properly communicated by employees tocorporate officers in a timely manner.
(5) The company shall endeavor to improve work productivity by promoting changes in ways of working.

5. Systems to Ensure the Propriety of Business Operations Conducted by the Corporate Group Consisting of theCompany and Its Subsidiaries(1) Systems for reporting to the Company on matters pertaining to the execution of duties by the subsidiary’s
directors, etc., and systems for ensuring that the performance of duties by directors etc. of is efficient[1] The Company shall establish rules concerning the management of subsidiaries and affiliated companies(hereinafter “Associated Companies”) and endeavor to maintain and enhance the Lawson brand through close
collaboration with them. However, with regards to affiliated companies, the Company will work to establish
and maintain systems through phased implementation, taking into account such factors as relations with otherleading shareholders, difference in laws, regulations and business customs and the like of foreign countries.
[2] The Company shall establish a department for supervising Associated Companies, and while respecting theindependence of Associated Companies, we shall step up action to optimize a system for supervising
Associated Companies by taking into account the reasons that the Company has taken a stake in the AssociatedCompany, engaging in negotiations or providing advice to Associated Companies as necessary, operating asystem for receiving reports from them, etc.
(2) Rules and other systems for risk management by the subsidiary and systems for ensuring that the subsidiary’s
directors, etc., and employees execute their duties in conformity with laws, ordinances, and the articles ofincorporation[1] While respecting the independence of Associated Companies, in view of the purpose of the Company’s equity

participation in Associated Companies, the Company shall establish Group regulations such as basic policies
for the management of Associated Companies and management policies thereof, and keep the AssociatedCompanies fully informed of the Lawson Group Code of Conduct.

[2] The Company shall establish an organization with jurisdiction over Associated Companies (division withresponsibility and department in charge), and a dedicated department that can provide support to Associated39Lawson, Inc.

CORPORATE GOVERNANCE
Companies from technical standpoints, and endeavor to ensure the soundness of operations at AssociatedCompanies.
[3] The Company shall appoint designated people at major Associated Companies to be responsible for promoting
compliance and risk management. Moreover, Compliance and Risk Management Office of Lawson group also
holds meeting with People in charge of Compliance and Risk Management in Associated Companies at aregular basis to check and maintenance development of Associated Companies and give advices if necessary.
The Company ensures appropriate business operations across the entire Lawson Group.
[4] The Company will establish a system that the people in charge of Compliance and Risk Management in
Associated Companies will report immediately to the Company if they are aware of the situation could harm
Associated Companies.
[5] The Internal Audit Department shall cooperate in auditing the status of establishment of internal control
systems at Associated Companies, and promote improvements based on the results of audits.
(3) The Company will report immediately to the parent company if they are aware of the situation could harm thecompany and Associated Companies.

6. Necessary Systems to Ensure Proper Financial Reporting by the Company and its Group of Companies(1) The Company shall enhance systems for preparing financial statements according to laws and regulations andaccounting standards and disclosing same after they have been discussed, examined and confirmed inaccordance with regulations governing information disclosure, in order to report financial information in aproper and timely manner.
(2) The Company shall establish a dedicated internal organization in order to properly implement the internal
control reporting system required by the Financial Instruments and Exchange Act, as an internal control for
financial reporting. Furthermore, the Company shall establish a system for self- and third-party evaluation andimprovement through the identification and recording of business processes at important business bases and thestatus of Companywide internal controls. The Company shall report regularly to the Board of Directors theresults of evaluations and improvements made at the Company and important subsidiaries.

7. Matters Concerning Employees Where a Corporate Auditor Requests Employees to Assist With Duties(1) The Company shall assign appropriate personnel to the Auditors’ Office as employees exclusively to assist
Corporate Auditors in the execution of their duties (hereinafter “Corporate Auditors’ Staff”).
(2) Corporate Auditors’ Staff may serve concurrently as Corporate Auditors of Associated Companies.
(3) Corporate Auditors’ Staff shall have the authority to conduct investigations necessary for audits by Corporate
Auditors following the instructions of Corporate Auditors.

8. Independence of Employees from Directors in the Preceding Item
Performance reviews of Corporate Auditors’ Staff shall be conducted by the Standing Corporate Auditors toensure that Corporate Auditors’ Staff carry out their duties appropriately. Personnel changes require the prior40

Lawson, Inc.

CORPORATE GOVERNANCE
consent of the Standing Corporate Auditors.

9. Systems for ensuring that directors and employees of the Company and directors etc. and employees of subsidiaries
make reports to corporate auditors and other systems concerning reports to corporate auditors(1) Directors and employees of the Company shall report important corporate management and businessadministration matters, as well as the status and results of the execution of their duties, to Corporate Auditors
so that the Corporate Auditors can carry out their duties effectively. Such important matters include complianceand risk-related issues and other matters relating to internal control.
(2) If directors become aware of any fact or event that will likely cause the Company to suffer significant damage
or loss, they shall immediately inform the Board of Corporate Auditors.
(3) Reports to Corporate Auditors shall basically be made in good faith without fail, and shall be made promptly if
required in addition to periodic reports.
(4) The Company will establish a system for cross-external consultation and reporting content will be reported tothe auditors in a timely manner.
(5) No person shall be subject to disadvantageous treatment by reason of having made a report toCorporate Auditors.

10. Other Systems to Ensure Effective Audits by Corporate Auditors(1) The Representative Directors and Corporate Auditors shall have regular meetings to enhance smoothcommunications with each other.
(2) Directors shall cooperate with the Corporate Auditors with regards to communications, the collection andexchange of information and so on between the Corporate Auditors and the corporate directors and the like of
Associated Companies so that the Corporate Auditors can perform their duties appropriately.
(3) Directors shall also cooperate in conducting surveys of significant business partners, which the Corporate
Auditors deem necessary.
(4) Directors shall enable the Corporate Auditors to collaborate with outside experts such as lawyers and certified
public accountants, if any Corporate Auditor deems it necessary in executing his/her duties.
(5) Legal Department, Risk Management Department, Internal Audit Department, Finance and Accounting
Department and others will assist in the necessary audit investigation by the request of the auditor.
(6) Expenses etc. incurred by Corporate Auditors in the performance of their duties shall be promptly reimbursed,
except in cases where the Company has proven that they were unnecessary for said performance of duties.

□Present Status of Internal Control Systems
1. Present Status of Compliance System and Risk Management System
Lawson has placed Compliance and Risk Management in charge of the promotion and establishment of compliance,
established the Legal Affairs Department to be in charge of compliance, and Risk and Information Security
Management Department in charge of risk management, and assigned a Corporate Risk and Management Officer41

Lawson, Inc.

CORPORATE GOVERNANCE(CRO) in each division and region. Lawson has also assigned CRO (Corporate Risk and Management Officer) andcompliance officers to respective divisions of the head office and Lawson branches nationwide. In addition, theCompliance and Risk Management Committee, a specialist committee consisting of compliance officers as its
members, is put in place to ensure compliance with laws and the effectiveness of risk management, the understandingof issues and the preparation and implementation of measures to prevent misconduct.
(1) Present Status of Compliance Systems
To continually comply with the law, and always maintain corporate conduct in line with generally acceptedmorals and societal expectations, Lawson maintains and refines its rules related to compliance and conducts
compliance training on a regular basis through e-learning and group training by job type. As for its code of conduct,
Lawson has established the Lawson Code of Ethics, the Lawson Corporate Conduct Charter, etc., and included
them in the Lawson Group C&R Handbook, which has been distributed and made available to all employees, thus
ensuring appropriate operations across the entire Group.
In addition to the employee awareness survey targeting all our employees, Lawson has sent out questionnaires
to its business partners (including the business partners of our major subsidiaries). Through such questionnaires,we have gained an understanding of the problems and issues related to compliance promotion activities andtransaction styles, and based on this knowledge, we are reviewing and improving our compliance system from awide perspective.
Lawson has also established reporting and consulting systems (internal contact points, a group-wide consulting
contact point and a consulting contact point for employees and business counterparties for Lawson’s franchised
stores) to maintain a system for detecting and coping with internal problems at an early stage. The Company
endeavors to propagate a culture of integrity within its organization by properly dealing with internal reports ofwrongdoings, reviewing systems for preventing recurrences, and raising awareness of specific cases throughmeetings, training sessions, etc.
(2) Present Status of Risk Management System
We at Lawson maintain and refine the rules concerning risk management, and place priority on three major risk
areas: product quality and hygiene control, data security, and natural and other disasters. We must be prepared for
all types of emergencies that may arise, and develop a system by which we can provide a swift response.
Under ordinary circumstances, the Compliance and Risk Management Council meeting is held once every
month. The council and its subordinate committees evaluate risks, establish responses to those risks, and aim toprevent those risks from developing into an incident such as by clarifying priorities for resolving problems,
formulating and promoting prevention strategies, and managing the processes of problem solving.
If a risk develops into an incident, an emergency risk response committee is established to contain the incident
and to minimize damage to operations. The emergency response committee gets to the bottom of what factors
caused the incident and from this analysis, takes measures not only to restore any loss of trust and prevent such an
incident from occurring again, but also to further improve Lawson’s ability to manage risks through feedback to
employees in training sessions.
Moreover, we keep Disaster Response Manuals at each of our business establishments (and at each division of42

Lawson, Inc.

CORPORATE GOVERNANCE
the head office). Also disaster response directions are contained in the various store manuals provided to stores. In
the case of a large-scale disaster, Lawson will set up a disaster response headquarters to provide a swift response.
These manuals are reviewed periodically and updated to address any problems identified through three disaster
drills per year.

2. Present Status of System Concerning the Storage and Management of Information Relating to the Execution of
Duties by Directors(1) Present Status of System for Recording, Storing and Managing Information Relating to Decisions Made by the
Board of Directors, Executive Committee and other Decision-making Bodies, Information Relating to Decisions
Made by Representative Director and Other Important Decisions, and Information Relating to Compliance andRisk Matters
1) Storage and Management of Information Relating to Decisions Made by the Board of Directors, Executive
Committee and Other Decision-making Bodies
To ensure the accountability of the representative director, written proposals and minutes of meetings are recorded
and stored. The original minutes of Board of Directors’ meetings for the most recent ten years are properly
maintained in a book vault at the executive office of the headquarters, and after ten years the original proposals
and minutes of the Board of Directors’ meetings are stored permanently in outside storage under strict security.
The minutes relating to decisions made by the Executive Committee and other decision-making bodies for themost recent year are properly maintained in the book vault in the executive office of the headquarters, and after
one year these minutes are stored permanently in an outside storehouse under strict security.
2) Storage and Management of Approval Documents and Written Contracts
In November 2012, we introduced an electronic approval system, totally eliminating the need to use paper for
approval documents including attachments. Information relating to decisions made by the President and otherimportant decisions prior to the introduction of the system is recorded and stored as follows to ensure theaccountability of the representative director and other decision-makers:
A. Approval documents by representative director with attachments for two years are maintained in the executive
office of the headquarters. After two years, such documents are stored in an external storehouse under strict
security.
B. Approval documents other than those by representative director, including approval documents for branches
are collected by the head office, and these documents are transferred after one year to be stored in an external
storehouse under strict security.
Written contracts are stored as follows: Meanwhile, electronic contracts are also being gradually introduced, andservices with high security reliability are selected and appropriately managed.
A. Franchise agreements and store lease agreements including any attached memorandums, which constitute thefoundation of Lawson’s business, are stored in an external storehouse under strict security immediately uponconclusion of the agreement.
B. Other written contracts are stored in secure locked locations at each responsible division or in an external43

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CORPORATE GOVERNANCE
storehouse under strict security control for seven years after expiration of the contract period.
3) Storage and Management of Information Relating to Compliance and Risk
To ensure the accountability of the Compliance and Risk Management, the written background and minutes ofmeetings are recorded and stored under strict security. With the approval of the Compliance and Risk Management,
the Risk and Information Security Management Department’s general manager deals with requests for access tosuch documents.
4) Storage and Management of Minutes of Meeting Bodies Other Than the Above and Other Important
Documents
The staff of responsible divisions store and manage these documents at their own discretion.
(2) Present Status of System Concerning Management and Monitoring of Information System as Well as Proper
Maintenance of Such Systems for Contingencies
Under Lawson’s Information Security Policy, the Information System Management Rules prescribe matters thatshould be observed by related divisions for the purpose of maintaining and improving information security andenhancing the reliability, effectiveness and efficiency of our information system. In this way, we maintain the
secure management and operation of systems and implement proper preventive measures and procedures in theevent of a contingency.
These rules apply to matters relating to the planning, development, maintenance and operation of the information
system, information system equipment, and related facilities. They prescribe not only matters to be observed byusers, but also management in the event of a failure in the information system, the management of changes in thesystem, the management of outsourcing, the management of system security, access management, project risk
management, business continuity management, compliance and other relevant matters.
3. Internal Control by the Certified Public Accountant
Lawson has an audit contract with Deloitte Touche Tohmatsu (“Tohmatsu”). There are no special relationships
involving mutual interests between Lawson and Tohmatsu or any of the staff of Tohmatsu engaged in auditing workfor Lawson. In close liaison with Lawson’s corporate auditors and Lawson, the certified public accountant issues areport on its planned auditing work for each business period, and subsequently issues regular reports on the progressof the auditing. During each business period, Lawson’s corporate auditors and the certified public accountant
exchange information and opinions wherever deemed necessary to the efficiency and accuracy of the auditing process.
The corporate auditors received a notification from the accounting (independent) auditors that they are taking steps
to improve the “system for ensuring appropriate execution of duties” (matters specified in the items under Article
131 of Corporate Accounting Rules) in accordance with the “Quality Control Standards Relating to Auditing”(Business Accounting Deliberation Council, October 28, 2005) and other standards, and requested explanations whennecessary.
If an accounting (independent) auditor violates or infringes the Corporate Law of Japan, or the Certified Public
Accountants Law, and if the Board of Directors deems it necessary, the Board of Directors shall submit a proposal to
the General Meeting of Shareholders to dismiss or not reappoint the aforesaid accounting (independent) auditor after
receiving the agreement of the Board of Auditors. If it is deemed that the aforesaid accounting (independent) auditor

44

Lawson, Inc.

CORPORATE GOVERNANCE
fits any of the circumstances prescribed in any item of Clause 1 of Article 340 of the Corporate Law, the Board ofAuditors can dismiss the aforesaid accounting (independent) auditor by unanimous decision.

4. Present Status of System to Ensure Appropriate Business Activities in Group Companies
Lawson has designated a compliance and risk management officer at its major affiliated companies. Regarding
Compliance and Risk Management, these officers and the person in charge of affiliated companies at Lawson attend
Lawson’s Affiliated Company Compliance Officers Committee meetings, while Overseas Business-Related
Compliance Subcommittee meetings are held for overseas subsidiaries, thus ensuring that information and knowledge
is shared with the Lawson group. In this way, Lawson not only can prevent misconduct and other issues fromoccurring, but also can maintain and implement a system for a swift response to any such incident.
To support sound management at its affiliated companies, Lawson dispatches or loans directors/corporate auditorsand employees to these companies. In this way, Lawson not only helps to ensure the businesses of the affiliatedcompanies operate appropriately and efficiently, and but also communicates and shares information with the affiliatedcompanies. The Company has established a department for supervising Associated Companies, and a system is inplace whereby if a risk emerges at an Associated Company, it is reported to the Company. Furthermore, information
relating to risks at the Company and Associated Companies is reported to the parent company in a timely andappropriate manner.
The Company has established an organization with jurisdiction over Associated Companies and a dedicateddepartment that can provide support to Associated Companies from technical standpoints, and is endeavoring toensure the soundness of operations at Associated Companies.

1. Basic approach towards the exclusion of antisocial forces
Lawson, considers the prevention of damage from antisocial forces to be an important part of ensuring proper
business activity and in its “2021 Basic Policy for Improvement of Internal Control Systems” it clarifies this by“The Company shall never get involved with antisocial forces or bodies that threaten the order and security ofprivate society, and shall take a firm stance on unjustified demand in cooperation with lawyers, the police and thelike.”

2. Present status of the exclusion of antisocial forces
Lawson provides a statement of principle concerning the exclusion of antisocial forces in the Lawson Corporate
Conduct Charter and the Lawson’s Code of Ethics and the entire organization takes a collective response to suchmatters.
With respect to internal controls, the office that integrates the response to a matter concerning an unjustified
demand by antisocial forces (hereinafter “office responding to antisocial forces”) provides central control of
information relating to antisocial forces. Not only will it give support to organizational frameworks to severrelations with antisocial forces, it will also work in cooperation with the National Police Agency and the prefectural45

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CORPORATE GOVERNANCE
or metropolitan police department. The office responding to antisocial forces will consult the above institutions
when responding to an unjustified demand from antisocial forces.
We formulated the “Transaction Policies of the Lawson Group” in September 2010 to deal with this issue acrossthe entire supply chain.

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CORPORATE GOVERNANCE
V Others

Matters Related to Defense against Takeover

None

Supplementary Explanation Associated with the Relevant Item
Nothing to report[Outline of the timely disclosure system](1) Lawson has assigned the Director of the Corporate Communications Division to be in charge of timely
disclosure, with departmental responsibility falling to the Corporate Communications Division. They shall promote
understanding of the importance of timely disclosure within the Company.
(2) The Company’s employees are required to report to and consult the person in charge of timely disclosure withregard to any information they deem important. Furthermore, the person in charge of timely disclosure passes onsuch information to the Director of the Financial Administration Division in order to determine whether the
information constitutes insider information.
(3) With regard to information regarding which consultation or reporting is made, the person in charge of timely
disclosure seeks the advice of the director in charge, the Director of the Corporate Strategy and Planning Division,
the Director of the Financial Administration Division and other relevant departments concerning the necessity of
disclosing the information in a timely manner, what to disclose, and the timing of disclosure in order to ensure
timely disclosure of appropriate information.
(4) Lawson set basic regulations governing information disclosure in August 2006 to establish an internal system forthe disclosure of important information. With regard to insider trading, the Company established regulations toprevent insider trading in July 2000 and develop a monitoring system.

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CORPORATE GOVERNANCE

Corporate Governance and Internal Control Systems(As of August 1, 2021)

General Meeting of Shareholders
Nomination andCompensation
Advisory Committee
Non-executive
directors or parttime outside
corporate
Consult
auditors: 7(6 of whom are
Proposeindependent
Directors)

Appointment
and dismissal
Board of Directors
Outside directors: 3(3 of whom are
independent Directors)
In-house directors: 4
Total: 7

Appointment, dismissaland supervision

Appointment
and dismissal
Board of Corporate Auditors
Outside corporate auditors: 3(3 of whom are independent
Corporate Auditor)
In-house corporate auditors: 2
Total: 5

Auditing

Discussion and reporting

Appointment
and dismissal
Auditingand dismissal
Certified Public
Accountant

Auditing

Account auditing(Operational Organization)
Financial Reporting Internal
Control Committee

President
Management Council
Meeting

Comments

Compliance and Risk
Management

LawyerSDGs Committee
Internal Audit Division

Compliance and Risk
Management Committee
Information Security
Committee

Corporate divisions

Operating divisions

Investment and management
Subsidiaries and Affiliates

48