Announcement of Disposal of Treasury Shares Under Restricted Stock Unit Plan

At the meeting of the Board of Directors held today, SHIFT announced that it had resolved to dispose of treasury share (hereinafter the “Disposal of Treasury Share”) under the restricted stock unit plan (hereinafter “RSU”).

1. Overview of Disposal

2. Purpose and Reason for the Disposal
At the meeting of the Board of Directors held on October 26, 2021, SHIFT introduced the Restricted Stock Unit Plan (the “Plan”) as a new compensation plan for our directors (excluding directors serving as members of the Audit and Supervisory Committee) with the aim of providing them with an incentive to continuously increase SHIFT’s company value and to further promote the sharing of value with its shareholders. The plan also provides its directors serving as members of the Audit and Supervisory Committee with an incentive to prevent damage to its corporate value and maintain its credibility through the sharing of value with our shareholders. The details of this system are as described in <Overview of the Plan>.

In addition, (i) at the 17th Ordinary General Meeting of Shareholders held on November 25, 2022, in accordance with the Plan, the total amount of its common stock to be issued or disposed and money provided to its directors (excluding directors serving as members of the Audit and Supervisory Committee) shall be no more than ¥500 million per year (including ¥50 million as outside directors) within the existing monetary compensation framework, and (ii) at the 16th Ordinary General Meeting of Shareholders held on November 26, 2021, in accordance with the Plan, the total amount of our common stock to be issued or disposed and money provided to directors serving as members of the Audit and Supervisory Committee shall be no more than ¥20 million per year within the existing monetary compensation framework.

Based on the resolution of the Board of Directors held today, it has decided to dispose of 102,345 shares of its common stock, in accordance with that the Restricted Share Unit transferred to 7 of its directors in the fiscal year ended August 2022 is vested, in accordance with the Plan.

Overview of the Plan
Under the Plan, after the expiration of a period of 3 to 5 years specified by its Board of Directors (hereinafter the “Calculation Period”), the number of shares of its common stock and money calculated on the basis of the number of shares established for each of its directors (hereinafter the “Base Number of Shares”) at its Board of Directors (in the case of directors who are Audit and Supervisory Committee members, through consultation with directors who are Audit and Supervisory Committee members) is granted and paid free of charge as compensation, etc. to such directors.

The formula for calculating remuneration, etc. under the Plan is as follows:

[Number of shares last granted (*1) (*2) = Base Number of shares (*3) × Ratio of period of service provided (*4)]

Note 1: However, from the viewpoint of securing funds for tax payment, the amount of money shall be paid that is calculated by multiplying a portion of the final number of shares granted (no more than 50% of the final number of shares granted) by the closing price of its common stock on the Tokyo Stock Exchange on the business day prior to the date of resolution of each Board of Directors for the issuance of common stock or the disposal of treasury share under the Plan (if a transaction has not been consummated on that day, the closing price on the most recent trading day prior thereto) among its director who want to receive it. In addition, if there is a possibility that the final number of shares to be granted may exceed the upper limit of the remuneration, etc. under the Plan, the final number of shares to be granted and the amount to be paid shall be reasonably adjusted within the limit not exceeding the applicable upper limit.
Note 2: Provided, however, that reasonable adjustments may be made in accordance with changes in the position during the calculation period.
Note 3: The basic number of shares is determined for each of its directors at its Board of Directors meetings (for directors who are Audit and Supervisory Committee members, through consultation with directors who are Audit and Supervisory Committee members).
Note 4: Ratio of period of the service provided is determined by its Board of Directors (with regard to directors who are Audit and Supervisory Committee members, through consultation with directors who are Audit and Supervisory Committee members) (provided, however, that the ratio does not exceed 1).

The total number of shares of its common stock to be issued or disposed under the Plan shall not exceed 89 thousand shares per year for directors (excluding directors serving on the Audit and Supervisory Committee) (of which no more than 15 thousand shares are outside directors) and not exceed 6 thousand shares per year for directors serving on the Audit and Supervisory Committee (provided, however, that the total number shall be adjusted to the extent reasonable in the event of a stock split (including free allotment of shares of its common stock) or a reverse stock split or other events requiring adjustment of the total number of shares of its common stock to be issued or disposed.).

Its directors will receive the delivery of shares of its common stock on an ongoing basis for the accounting period, subject to its directors’ and other positions established by its Board of Directors. Provided, however, that in the event such director loses any of the positions determined by the Board of Directors of the Company or by any other Board of Directors of the Company due to any reason deemed justifiable by our Board of Directors during the Calculation Period, the Company may, by resolution of the Board of Directors of the Company, provide us with a reasonable number of its common shares (or such amount of money as may be reasonably determined in lieu of such shares) out of the final number of shares delivered within the limits set forth above.

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Contact
Motoya Kobayashi
Director
ir_info@shiftinc.jp