Yamato : Corporate Governance Report

Corporate Governance

Last Updated: March 23, 2022

YAMATO HOLDINGS CO., LTD.

Yutaka Nagao

President

Contact: [phone]

Securities Code: 9064

http://www.yamato-hd.co.jp

The corporate governance of YAMATO HOLDINGS CO., LTD. (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information

1. Basic Views

Based on the Yamato Group Corporate Philosophy, the Company and its group companies (the "Group") has been engaging in business activities in line with laws and social norms, and promoting management in conformity with compliance.

Moreover, positioning the effective use of the Group's business resources to maximize its corporate value as one of utmost management priorities, the Group has been implementing measures to enhance its management structure as an approach to corporate governance.

[Reasons for Non-compliance with the Principles of the Japan's Corporate Governance Code]

The Company complies with all principles (including ones for the Prime Market to be applied on and after April 4, 2022) of Japan's Corporate Governance Code revised in June 2021.

[Disclosure Based on the Principles of the Japan's Corporate Governance Code]

Initiatives of Yamato Holdings for corporate governance have been described in this report as well as the Corporate Governance Guidelines, the Notices of the General Meeting of Shareholders, Japanese securities reports and Integrated Reports prepared by the Company and its website, so please refer to these reports and website.

Details of disclosure items based on the principles of the Japan's Corporate Governance Code are as follows.

[Principle 1-4Cross-Shareholdings]Policy on cross-shareholdings

The Company maintains a policy of owning stocks that are deemed meaningful, based on a comprehensive consideration, from a medium- to long-term perspective, of the relationship with the Group's businesses, the profitability of the Company, and the possibility of creating business opportunities, among other factors.

A decision is made every year at the Board of Directors Meeting concerning whether to continue holding the stocks, based on quantitative and qualitative consideration regarding primarily the benefits and risks associated with holding the stocks, in light of various factors including the business track record with the Company, and the market price of the shares. If it is decided, as a result of the consideration, that there is little significance of holding stocks, the Company reduces the stocks held.

Exercise of voting rights

The Company maintains a policy of making decisions on supporting or opposing agenda items on a case-by-case basis, and exercises the voting rights, with consideration given to the issuing company raising its corporate value, the issuing company's compliance framework, and the possibility that the issue will have a negative impact on the Group's business, among other factors.

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[Principle 1-7 Transactions among Related Parties]

The Company has provided that the Board of Directors shall make decisions with respect to matters such as officers with interests in competing businesses and conflict-of-interest transactions, in accordance with the Board of Directors Regulations and other regulations.

Also, the Company has established a framework to enable the persons giving approval to make sure that, if the Company or a Group company engages in business transactions with key shareholders or other related parties, the interests of shareholders and the Company are not harmed, taking into consideration the importance and nature of the business transaction in question, in accordance with internal regulations.

[Supplementary Principle 2-4-1 Ensuring Diversity in The Promotion to Core Human Resources]

The social environment surrounding our group is changing drastically, and the needs of society are rapidly diversifying. In order to flexibly respond to these changes, the human resources active in the organization must also become more diverse. By promoting respect for human rights and diversity, we aim to become an internationally competitive corporate group that is resistant to market changes.

◆Basic Diversity Policy

The Yamato Group respects the diversity of its employees, and believes that allowing each individual to maximize their abilities is the source of innovation that creates new value and leads to the growth of the company and the realization of a prosperous society. The Company promotes diversity throughout the Group by creating a working environment where diverse human resources can play an active role and training diverse human resources based on the approach of "Inclusive Management," which is the DNA of the Yamato Group.

In January 2021, the Group formulated the "Sustainable Medium-Term Plan 2023." We will promote sustainable management based on this plan, which sets out specific actions to be taken on each materiality issue and targets to be achieved by the fiscal year ending March 31, 2024, in order to realize our environmental and social vision, which we have set as our future vision for creating a sustainable future.

◆Social Vision

"Through Co-Creation and Fair Business Activities, Help Create a Society That Leaves No One Behind."

◆Goals and Status of "Human Rights and Diversity"

• Percentage of all employees (full-timers) participating in human rights training

Target (cumulative total for fiscal year ended March 31, 2021 to fiscal year ending March 31, 2024): 100%

Status (fiscal year ended March 31, 2021): All executives and managers (management officers) have completed the course

• Employment rate of persons with disabilities
  Target (fiscal year ending March 31, 2024): 2.5%
  Status (fiscal year ended March 31, 2021): 2.36%
• Number of female managers (executives) / ratio of female managers

Target (fiscal year ending March 31, 2024): Double the number compared with the fiscal year ended March 31, 2021 / 10%

Status (fiscal year ended March 31, 2021): 336 people / 5.1%

Since 2017, the Yamato Group has been holding "Female Leaders Meetings" for female employees as part of its career development support, as well as dispatching female employees to cross-industry training and external training programs with external organizations. In addition, we also hold "sessions for supervisors" to develop female non-manager employees and support their further success, and we aim to create a workplace environment in which female employees can play an active role across the entire Yamato Group.

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As we do not recognize that there is any particular difference in the timing of hiring or nationality in terms of promotion to management positions, we do not set or disclose targets for mid-career hires or foreign nationals to be promoted to management positions at this time.

*The Yamato Group's sustainability and diversity initiatives, as well as ESG data, are posted on the Company's website.

• Yamato Group's sustainabilityhttps://www.yamato-hd.co.jp/csr/management/
• Diversity

https://www.yamato-hd.co.jp/csr/society/diversity_and_inclusion.html

• ESG data https://www.yamato-hd.co.jp/csr/esg/performance.html

• Integrated Report https://www.yamato-hd.co.jp/english/investors/library/annualreport/

[Principle 2-6 Roles as Asset Owners of Corporate Pension Plan]

In accordance with the revision of the Group's retirement benefit system, the Yamato Group Corporate Pension Fund was dissolved and the Yamato Group Employees Welfare Center, which took over the retirement benefit investment management function, manages the reserves for the Company's corporate pension plan. The Company facilitates the professional development of said Center's staff mainly by allocating personnel with expertise at the Center's secretariat, and by sending staff members to external seminars.

The Center's management policies are decided by the board of Yamato Group Employees Welfare Center, taking into consideration the deliberations of the Pension Assets Management Committee. Personnel with the appropriate qualities are assigned to the Pension Assets Management Committee and the board of Yamato Group Employees Welfare Center, and a labor union official is assigned as a representative for the beneficiaries.

[Principle 3-1 Enhancement of Disclosure]

1. Company objectives (e.g., Management Philosophy), management strategies and management plans
   The Company formulates the medium-term management plan based on the Management Philosophy for the purpose of increasing the overall corporate value while having respect for all stakeholders, and publishes this plan on its website and other media.
2. Basic views and basic policies on corporate governance

The Company Precepts form the origin of the corporate spirit of the Company. Recognizing that its Management Philosophy based on the Company Precepts represents what we aim to be, the Company seeks to continually enhance its corporate value. To this end, the Company aims to improve the satisfaction of all customers, shareholders, society and employees and pursues effective corporate governance by ensuring management transparency, fairness and swiftness.

1. The Board of Directors' policies and procedures in determining the compensation of the senior managements and Directors
   These are described in "Disclosure of Policy for Determining Compensation Amounts or Calculation Methods Thereof" under II. 1. [Director Compensation].
2. The Board of Directors' policies and procedures in the appointment and dismissal of the senior management and the nomination of candidates for Director and Audit & Supervisory Board Member Items for the appointment and dismissal of Directors, Audit & Supervisory Board Members and executive officers are deliberated by the Nomination and Compensation Committee, a majority of whose members are Outside Directors, and decided by the Board of Directors, under the policy of appointing a person who has abundant experience and considerable insight relating to corporate management and business promotion, grasps the essence of the issues facing the Company and has capabilities that will enhance its management structure taking into consideration a sense of humanity from observing and evaluating from diverse perspectives. Furthermore, items for the appointment of Audit & Supervisory Board Members require the approval of the Audit & Supervisory Board.

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1. Explanation of the individual appointment and dismissal of the senior management and the nominations of candidates for the positions as Director and Audit & Supervisory Board Member by the Board of Directors based on (iv) above
   Individual backgrounds and reasons for election of candidates for Director and Audit & Supervisory Board Member have been described in Notices of the General Meeting of Shareholders.

[Supplementary Principle 3-1-3 Disclosure Related to Sustainability]

Based on the transformation plan "YAMATO NEXT100" formulated as a grand design for the management over the medium to long term, in January 2020, the Company promotes the theme "Sustainability initiatives - Management embodying the environment and society."

This plan cites dual visions in terms of paving the way to a sustainable future, one of which is the environmental vision "Connect. Deliver the Future via Green Logistics" and other of which is the social vision "Through Co-Creation and Fair Business Activities, Help Create a Society That Leaves No One Behind." As material issues (materiality), the Yamato Group has identified "Energy & Climate," "Atmosphere," "Resource Conservation & Waste," and "Resilience of Companies & Society" in the environmental area, and "Labor," "Human Rights & Diversity," "Safety & Security," "Data Unitization & Security," "Supply Chain Management," and "Community" in the social area, and set long-term targets, including carbon neutrality* in fiscal 2050.

*Scope 1 & 2 (in-house emissions)

Furthermore, in January 2021, the Yamato Group formulated the "Sustainable Medium-Term Plan 2023 (Environment and Society)." This plan is a comprehensive mid-term sustainable plan that sets out specific actions to be taken on each material issue (materiality) and targets to be achieved by the fiscal year ending March 31, 2024 in order to achieve the two visions.

The Company recognizes that climate change is a significant issue for increasing the Group's medium to long-term corporate value and to realize a sustainable society, and we understand and evaluate risks, opportunities and their impacts related to climate change. Furthermore, we shall work to enhance information disclosure based on TCFD (Task Force on Climate-related Financial Disclosures) recommendations.

*The Yamato Group's initiatives on sustainability and ESG data have been posted on the Company's website.

• The Yamato Group's sustainability:https://www.yamato-hd.co.jp/csr/management/
• ESG data

https://www.yamato-hd.co.jp/csr/esg/performance.html

• Integrated Report https://www.yamato-hd.co.jp/english/investors/library/annualreport/

Investment in human capital and intellectual property

In the medium-term management plan "One Yamato 2023," which concludes in the fiscal year ending March 31, 2024, the Yamato Group is working on the following priority measures: HR strategy which supports "Innovating Delivery Business" and Promoting data and innovation strategies.

*The Yamato Group's medium-term management plan "One Yamato 2023," the priority measures and investment plans in this plan are posted on the Company's website.

• The Yamato Group's medium-term management plan, "One Yamato 2023" https://www.yamato-hd.co.jp/english/investors/policy/plan.html
• Integrated Report

https://www.yamato-hd.co.jp/english/investors/library/annualreport/

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[Supplementary Principle 4-1-1 Determination and Disclosure of Scope of Matters Delegated to Management]

The Board of Directors Meeting is held at least once a month to deliberate on and decide the basic policies for business management.

On the other hand, the Company has set up the executive officer system in order to realize the efficiency of the management and the clarification of responsibility through the clear separation of management decision-making, supervision and execution. The scope of responsibility of each executive officer that is decided by the Board of Directors is disclosed, and executive officers execute business in accordance with internal regulations.

[Principle 4-9 Criteria for Determining Independence and Qualification for Independent Outside Directors]

As policies for independence from the Company to elect Outside Directors and Outside Audit & Supervisory Board Members, the Company has established its own criteria for determining independence as follows based on the criteria for determining independence presented by the Tokyo Stock Exchange.

The Company has appointed all of the Outside Directors and Outside Audit & Supervisory Board Members as independent officers provided for under the provisions of that exchange and registered the individuals as such with the exchange.

A party with respect to whom any of the following apply shall be deemed as not having met the requirements for independence of an Outside Director or Outside Audit & Supervisory Board Member of the Company.

• A party who is a major business partner of either the Company or a Group company (hereinafter collectively referred to as the "Company"), or otherwise if such party is a corporation or other such entity, a person who executes business thereof;
• A major business partner of the Company, or otherwise if such party is a corporation or other such entity, a person who executes business thereof;
• A consultant, accounting professional or legal professional who receives substantial monetary consideration and/or other economic benefits from the Company besides officer remuneration;
• A consultant, accounting professional, legal professional or other such professional who is a member of a corporation or other such entity that provides professional services acting as a major business partner of the Company;
• A major shareholder of the Company, or otherwise if such major shareholder is a corporation or other such entity, a person who executes business thereof;
• A recipient of donations from the Company or a person who executes business thereof;
• A person who now serves or has served in the past as a Director (excluding Outside Director), Audit & Supervisory Board Member (excluding Outside Audit & Supervisory Board Member), Executive Officer, or employee of either the Company or one of its subsidiaries;
• A close relative of a Director, Audit & Supervisory Board Member, Executive Officer or employee of the Company;
• A close relative of a person (excluding inconsequential persons) with respect to whom any of the aforementioned apply.

[Supplementary Principle 4-10-1 Approach, authority, and role regarding independence of the Nomination and Compensation Committee]

The Nomination and Compensation Committee shall comprise a majority of independent Outside Directors and internal Directors, and shall be an advisory committee of the Board of Directors, and deliberate on particularly important proposals such as nomination and compensation and submit to the Board of Directors, thereby raising management transparency.

The Nomination and Compensation Committee shall deliberate on proposals related to the appointment or removal of Directors, Audit & Supervisory Board Members, and executive officers based on business performance and multi-faceted observations and evaluation, verify the validity of such decisions, and then submit the results to the Board of Directors. In addition, the Nomination and

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