Astellas Pharma : Notice Regarding Continuation of the Performance-linked Stock Compensation Scheme

Press Release

Notice Regarding Continuation of

the Performance-linked

Stock Compensation Scheme

TOKYO, May 12, 2021 - Astellas Pharma Inc. (TSE: 4503, President and CEO: Kenji Yasukawa, Ph.D., "the Company") today announced that at the meeting of the Board of Directors held today, a resolution was passed to approve the details of the incentive plan ("Plan") to be implemented in fiscal year 2021 based on the Performance-linked Stock Compensation Scheme ("Scheme") for the Company's Directors (excluding outside Directors and Directors who are Audit & Supervisory Committee Members; hereinafter "Directors") as described below.

1. Objective for the Scheme

1. The Scheme is a medium- to long-term-based incentive plan, for the Directors that is highly transparent and objective, and closely linked with the Company's enterprise and shareholder value with the aim of promoting management focused on increasing enterprise and shareholder value over the medium- to long-term.
2. The Scheme adopts a structure called the executive compensation BIP (Board Incentive Plan) trust ("BIP Trust"). BIP Trust is an executive incentive plan modeled on Performance Share and Restricted Stock systems in the U.S. The BIP Trust acquires the Company's shares and conducts a "delivery of the Company's shares" (as set forth in 3. (5) below; hereinafter the same) to the Directors based on the level of growth of enterprise and shareholder value, etc.

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2. The Structure of the BIP Trust

1. Resolution of Board of Directors Meeting

					[Settlor]
7) Gratis transfer and				The Company				Share
								Delivery
cancellation of residual
								Policy
shares
					2) Trust establishment
8) Delivery of residual assets			4) Dividends
							6) Delivery of the
				[Trustee] (planned)
				Company's shares
			Mitsubishi UFJ Trust and Banking
			and cash benefits
				Corporation

1. The Company's (Joint Trustee: The Master Trust Bank of Japan, Ltd.)

Stock market

shares

BIP Trust

[Beneficiaries]

The Company's shares and cash

Directors

5) Instruction not to exercise

3) Payment

voting rights

Trust administrator

1. Based on the Scheme, the Company shall resolve on the implementation and content of the Plan for fiscal year 2021 at the meeting of the Board of Directors.
2. The Company will put money in trust, to establish the BIP Trust, which will be the trust in which the beneficiaries shall be the Directors who have satisfied the beneficiary conditions ("Trust"). The money entrusted in the Trust shall be within the scope of approval of the 14th Term Annual Shareholders Meeting.
3. The Trust, in accordance with the instructions of the trust administrator, will use the money entrusted in 2) to acquire the Company's shares on the stock market.
4. Dividends for the Company's shares in the Trust will be paid in the same way as with other shares of the Company.
5. Voting rights are not to be exercised on the Company's shares within the Trust throughout the trust period.
6. During the trust period, beneficiaries will receive delivery of the Company's shares in accordance with the Company's Share Delivery Policy.

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1. In the event that residual shares remain at the expiration of the trust period mainly due to the extent to which enterprise and shareholder value have achieved growth during the trust period, the Trust will continue to be used as an incentive plan based on the Scheme by making changes to the trust agreement and additional entrustments (*1), or otherwise a gratis transfer of these residual shares will be made from the Trust to the Company, and upon acquiring these shares the Company plans to implement the cancellation of them by resolution of the Board of Directors.
2. Upon conclusion of the Trust, the residual assets remaining after allocation to the beneficiaries are to belong to the Company within the scope of the reserve fund for trust expenses after deductions for stock purchases from trust money. In the event that there remain residual assets beyond the scope of the reserve fund for trust expenses, such assets are to be donated to an organization having no relationship of interest with the Company or Directors and Corporate Executives of the Company.

(*1) As the Plan are the same kind of incentive plan as the Performance-linked Stock Compensation Scheme introduced in fiscal year 2015, the existing BIP (BIP Trust A) that was established in fiscal year 2018 will continue to be used.

3. Details of the Plan

1. Overview of the Plan

The Plan is an incentive plan, under which delivery of the Company's shares will be conducted during the three-year period from the fiscal year ending March 31, 2022 to the fiscal year ending March 31, 2024 ("Applicable Period"), based on the level of growth of enterprise and shareholder value, etc.

The Company intends to continue implementing incentive plans which are similar to the Plan in each year in and after the following fiscal year by establishing new BIP Trusts, or by making changes or additional entrustments to the existing BIP Trusts that have expired. The details of incentive plans put into effect next fiscal year or later shall be determined at the appropriate time by resolution of the Board of Directors.

1. Individuals eligible under the Plan (Beneficiary Conditions)
   The Directors who are in office as of July 1, 2021 ("Eligible Individuals") will, in principle, receive delivery of a certain number of the Company's shares based on the points provided for below in (4) subject to the condition that the Beneficiary Conditions set forth below are satisfied.

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The Beneficiary Conditions are as follows:

1. 1. Such person shall continue to serve as the Director until June 1, 2024;
   2. Such person shall have met other criteria which are deemed necessary for achieving the purpose of the stock compensation scheme.
2. Trust period
   The trust period shall be from May 18, 2021 (planned) to August 31, 2024 (planned).
   At the expiration of the trust period, the Company may continue the Trust in the form of incentive plans which are similar to the Plan by making changes to the trust agreements and making additional entrustments.
3. Number of the Company's shares to be delivered to Eligible Individuals
   The number of the Company's shares to be delivered to Eligible Individuals (including the number of the Company's shares to be converted into cash in accordance with (5) below) shall be determined on the basis of the points, which have been allocated in accordance with the following, with 1 point corresponding to 1 share of the Company's share (*2).

(*2) In the event that the number of the Company's shares belonging to the Trust increases or decreases due to stock split, gratis allotment or stock consolidation, etc., the number of the Company's shares to be delivered per point shall be adjusted by means of a reasonable method.

Basic points shall be allocated to the Eligible Individuals who are in office as of July 1, 2021 in accordance with the following formula.

(Formula for the calculation of basic points)

Basic amount (*3) determined based on rank divided by the Average closing price of the Company's shares on the Tokyo Stock Exchange in March 2021

* Any fractions of less than one shall be discarded.

(*3) The basic amount levels shall be set appropriately in accordance with responsibilities and other factors in reference particularly to objective remuneration survey data of an external expert organization in order to ensure competitive remuneration levels that enable the Company to recruit and retain talents.

Eligible Individuals who are in office as of June 1, 2024 will receive delivery of the Company's shares from the Trust in numbers corresponding to the points calculated according to the formula below.

Basic points × Performance-linked coefficient (*4)

* Any fractions of less than one shall be discarded.

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(*4) The performance-linked coefficient of the Plan shall be determined within a range from 0% to 200% based on results of comparing the Company's total shareholder return ("TSR*") during the applicable period, against both the growth rate of Tokyo Stock Price Index (TOPIX) and the TSR of global pharmaceutical companies ("TSR Peer Group"). The list of the TSR Peer Group shall be proposed to the Board of Directors after deliberation by the Compensation Committee, and accordingly determined by June 30, 2021.

1. • TSR refers to shareholders' total return on investment, encompassing both capital gains and dividends.
2. Method and timing for delivering the Company's shares to the Directors
   "Delivery of the Company's shares" refers to, at a given time, the receipt of half of the number of the Company's shares corresponding to the allocated points from the Trust (provided that shares less than one unit shall be converted into cash within the Trust and the cash equivalent to the amount of conversion will be received), and the receipt of the cash equivalent to the remaining half after conversion into cash within the Trust.
   Eligible Individuals who have met the Beneficiary Conditions will receive delivery of the Company's shares around June 2024.
   In the event that an Eligible Individual retires during the trust period (excluding voluntary retirement and dismissal), as a general rule, such individual will receive the delivery of the Company's shares in numbers corresponding to the points that have been allocated up to the time of retirement.
   In the event that an Eligible Individual becomes deceased during the trust period, as a general rule, the Company's shares shall be converted into cash in numbers corresponding to the points which have been allocated to such individual up to that time within the Trust, and the cash equivalent to the amount of conversion will be received by such individual's heir from the Trust.
3. Amount expected to be entrusted to the Trust and the number of the Company's shares expected to be delivered from the Trust (including the number of the Company's shares to be converted into cash in accordance with (5) above).
   The Company intends to entrust ¥866 million to the Trust (*5).

(*5) Equivalent to the total amount of stock purchases, trust fees and trust expenses during the trust period, and inclusive of the residual assets succeeded from the existing BIP Trust. At the 14th Term Annual Shareholders Meeting, it was approved and resolved the maximum amount of contribution to the Scheme to be ¥1,640 million per fiscal year, and the amount to be entrusted by the Company to BIP Trust in each fiscal year shall be within the amount thus resolved.

The maximum number of the Company's shares to be delivered by the Trust during the trust period in accordance with (4) above shall be the number derived by dividing maximum amount of ¥1,640 million entrusted to the Trust by the

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