ISS Unanimous Support for ValueAct Proposals: Recommends Shareholders Vote AGAINST Five of Seven & i's Nominees and FOR All Four of ValueAct's Nominees

Influential proxy advisor endorses ValueAct's proposals and determines that change to Seven & i's ineffective board is warranted

ISS recommends shareholders vote AGAINST five of Seven & i's nominees, including President Ryuichi Isaka, "based on the long-term track record of poor performance in several units and poor capital allocation"

ISS recommends shareholders vote FOR all ValueAct's nominees to elect a strengthened board with the "willingness, and a clear mandate, to challenge the status quo"

In order for ValueAct's nominees to be elected, shareholders must vote AGAINST the five Seven & i nominees as recommended by ISS

SAN FRANCISCO, May 9, 2023 /PRNewswire/ -- ValueAct Capital ("ValueAct"), a global investment firm that has been a major shareholder of Seven & i Holdings ("Seven & i" or "the Company") since 2020, today announced that Institutional Shareholder Services ("ISS"), a leading proxy and corporate governance advisory firm, has recommended that Seven & i shareholders vote AGAINST five of Seven & i's Director Nominees and FOR all four of ValueAct's highly qualified Director Nominees to elect them to Seven & i's Board of Directors at the upcoming 2023 Annual Meeting of Stockholders ("2023 Annual Meeting").

ValueAct issued the following statement:

"We are pleased ISS has recognized that ValueAct's highly qualified nominees are the right choice for the Seven & i Holdings Board of Directors. A vote for ValueAct's nominees will deliver what shareholders have requested for years – an objective Strategic Review, a careful President Succession process, strengthened governance practices, and the appointment of an independent Chair. We believe Seven & i is at a pivotal point in its evolution, with a clear opportunity to create a global champion 7-Eleven company which will grow and create value for all stakeholders. We urge shareholders to follow ISS's recommendation by voting AGAINST five of Seven & i's Director Nominees and FOR all four of ValueAct's Director Nominees."

In its recommendation, ISS noted the following:

• "The company can be seen as a strong Japanese C-store business that hides several underperforming businesses... The underperformance at business units has been recurrent for over a decade, while the total returns of the company do not match what could be reasonably expected from a leading retail brand."
  
  
• "The company's strategic plan, basically designed by insiders and ratified by the full board... leaves execution to the same management under the same corporate culture. Given the long-term track record, this is not reassuring for investors."
  
  
• "Given that the super store business has been in restructuring mode for 15 years according to several management statements, shareholders might reasonably question why this time will be different."
  
  
• "The company argues that the strength of the Seven-Eleven Japan operation relies on its links with this division's food business… Seven-Eleven Japan is the largest food operation in Japan and three times the size of the superstores business in the food area, so the board's conclusions do not appear intuitive."
  
  
• "The counterintuitive results of the latest strategic review raise questions about the current board's ability to hold management accountable and instill a sense of urgency into reforms. Strengthening the board's ability to oversee management seems to be a primary goal of this campaign."
  
  
• "Additionally, there are some potential red flags related to company culture, like the issues with the US FTC on the acquisition of Speedway, perhaps a symptom of weak or unclear reporting lines, and weak employee reviews vs. other Japanese retailers."
  
  
• "While the new directors elected last year supported the new plan under a process that was far from ideal, a key concern is to what extent the same management team and corporate culture could produce different results."
  
  
• "Incumbents Isaka, Goto and Yonemura should be held responsible for past underperformance and poor capital allocation."
  
  
• "While the two new company nominees appear to have good credentials, the fact they were vetted by a nomination committee controlled by insiders and long-tenured directors makes it unclear whether they would bring the necessary willingness to challenge the status quo."
  
  
• "Dissident nominees Rogers, Gill and Natori bring relevant board, capital allocation and executive experience, while Levinson, as a direct representative of the dissident, would provide a shareholder perspective and the link to ValueAct's extensive research capabilities and experience effecting change."

As Seven & i's Board is limited to 15 members, shareholders are urged to vote AGAINST five of Seven & i's Director Nominees (items 2.1 to 2.5) and FOR all four of ValueAct's highly qualified Director Nominees (items 5.1 to 5.4) to elect them to the Board of Seven & i.

The addition of ValueAct's nominees and the removal of the President and his supporters will allow the whole Board to execute a pro-governance, pro-stakeholder mandate including a careful and deliberate President Succession process, an objective and thorough Strategic Review, and the appointment of an independent Board Chair.

For more information on ValueAct's proposals, please visit https://valueact.com/presentations and/or e-mail [email protected].

About ValueAct Capital

ValueAct Capital, established in 2000, is a global investment firm managing capital on behalf of some of the world's largest institutional investors. The Firm's goal is to transform companies and help them become 21st Century Global Champions. VAC seeks to identify and invest in high-quality businesses that are temporarily under-valued, taking a patient, collaborative and constructive approach to value building for all stakeholders with long-term investments. The firm generally holds 10-18 investments at any given time, and ValueAct Capital's internal team has built a track record serving on over 55 public company board seats. For more information, please see https://valueact.com.

CONTACT: [email protected]

Permission to quote from the ISS report was neither sought nor obtained.

SOURCE ValueAct Capital