April 26, 2017
This document is an English translationof a statement originally written in
Japanese. The Japanese original should
be considered as the primary version.

Company name:
Representative:
Code number:Contact:

Mitsubishi Tanabe Pharma Corporation
Masayuki Mitsuka
President and Representative Director
4508, First Section, Tokyo Stock Exchange
Yoshifumi Mifune, General Manager
TEL:+81-6-6205-5211

Introduction of Performance-Linked Stock Compensation Plan for Board Directors
Mitsubishi Tanabe Pharma Corporation (the “Company”) resolved at its Board of Directors
meeting held on April 26, 2017, that it will introduce a Performance-Linked Stock Compensation
Plan for the Board Directors and Executive Officers (the “Plan”). This is a compensation plan
to deliver the Company shares to the Board Directors and Executive Officers (excluding theOutside Directors, and the Directors and Officers who are non-residents of Japan; hereinafterreferred to as “Directors & Officers”), according mainly to achievement of performance targets
outlined in the Medium Term Management Plan (disclosed) after retiring from their offices.
The Company will submit a proposal of this Stock Compensation Plan for approval at the 10th
Ordinary General Meeting of Shareholders to be held on June 21 (the “10th Shareholders
Meeting”).
1. Introduction of the Stock Compensation Plan
(1)

The Company will introduce the Plan for the Directors and Officers as a compensation plan closely
linked to the corporate performance and having high transparency and objectivity, thereby aiming toboost motivation and morale of the Directors & Officers for sustainable growth of the Company
Group and expansion of corporate value over the medium and long term. (See Note [1])(2)

The introduction of the Plan is subject to approval at the 10th Shareholders Meeting.

(3)

The Company will adopt a framework called “Board Incentive Plan Trust” (the “Trust”). “Board
Incentive Plan Trust” is a trust for stock compensation plan, like performance share and restricted
stock plans in the U.S. and Europe, to make a delivery and payment (collectively “Delivery”) of theCompany’s shares and cash equivalent to the amount obtained by converting a part of the shares into
cash (collectively, the “Stock Compensation”) based on the position rank of each of Directors &Officers and degree of achievement for the Medium Term Management Plan. (See Note [2])(4)

At the expiration of the trust period of the Trust, the Company plans to continue the Plan by setting a
new Trust, or amending the trust agreement and entrusting additional funds to the Trust.
Note: [1]At the Company, the decision with respect to compensation for Directors and Officers is to bemade at the Board of Directors Meeting through the deliberations of the Compensation Committee
chaired by an Outside Director.

[2]

If the Plan is approved and introduced as proposed, the compensation plan for the Directors &Officers will be comprised of “base compensation”, “bonuses” which are tied to short-term

1performance, and “stock compensation” which is tied to medium- to long-term performance, witha greater degree of linkage with the Company’s performance and stock value.

As reference

information, the Outside Directors, who are not engaged in business execution, are compensatedonly with base compensation.

2. Structure of the Plan
①Resolution of the General
Meeting of Shareholders【Entrustor】
The Company⑧Gratis transfer andcancellation ofremaining shares⑨Delivery ofremaining assets⑤Dividends③Trust establishment②Establishmentof share delivery
rules【Trustee (Joint trustee)】(planned)④Acquisition of theCompany’s shares

Mitsubishi UFJ Trust and Banking Corporation
The Master Trust Bank of Japan, Ltd.

Stock market⑦Delivery of theCompany’s sharesand cash benefits

The Trust④Payment ofconsideration【Beneficiaries】
the Directors & Officers

The Company’s shares, cash

⑥Instruction not to exercise voting rights

Trust administrator①

The Company will obtain an approval on Director’s compensations in relation to the introductionof the Plan at the 10th Shareholders Meeting.

②

The Company will establish “share delivery rules” concerning Director’s compensations at theBoard of Directors meeting, accompanied with introduction of the Plan.

③

The Company will entrust funds within the limit of compensation approved by the resolution at
the 10th Shareholders Meeting referred to in Item ① above and establish a trust (the “Trust”)
wherein the Directors & Officers that satisfy the beneficiary conditions are beneficiaries.

④

The Trust will acquire the Company’s shares from the stock market by using the funds entrusted
under Item ③ above in accordance with the instructions of the trust administrator. The numberof shares acquired by the Trust will be within the limit approved at the 10th Shareholders Meetingreferred to in Item ① above.

⑤

The Company will pay dividends for the Company’s shares in the Trust in the same manner asother Company shares.

⑥

Voting rights of the Company’s shares in the Trust will not be exercised throughout the trust
period.

⑦

Depending on the position rank of the Directors and Officers and levels of achievement of
performance targets in the medium-term management plan, the number of points to be granted to2the Directors & Officers is determined every year. Points are accumulated during the trust
period. To the Directors & Officers who satisfy certain predetermined beneficiary conditions,
Delivery of the Stock Compensation will be made corresponding to the number of accumulated
points of said the Directors & Officers at the time of retirement.
⑧

If there are remaining shares at the expiry of the trust period due to non-achievement of
performance targets or any other reason, the Trust may continue to be used by modifying the trust
agreement and making additional contributions to the Trust, or the Trust may transfer the said
remaining shares to the Company without consideration and the Company may cancel such sharesby a resolution of the Board of Directors.

⑨

Remaining assets after distribution to the Directors & Officers at the time of termination of theTrust will belong to the Company within the scope of reserve for trust expenses, which are
obtained by deducting share acquisition funds from the trust funds. The portion exceeding thereserve for trust expenses will be donated to groups that have no vested interest with theCompany or its Directors & Officers.

Note: [1]In the event that the Company’s shares within the Trust become depleted as a result of the
Delivery of the Stock Compensation to the Directors & Officers who satisfy the beneficiary
conditions, the Trust may be terminated prior to the expiration of prescheduled trust period.

[2]

The Company may make additional contributions to the Trust, as a fund to acquire the Company’s
shares subject to the Delivery to the Directors & Officers, within the limit of compensation
approved by the resolution of the 10th Shareholders Meeting.

3. Contents of the Plan
(1) Outline of the Plan
The Plan is a performance-linked stock compensation plan in which the Stock Compensation will bedelivered to the Directors and Officers, depending on their position ranks and levels of achievement of
performance targets in the Medium-Term Management Plan. The Plan will be applicable for a periodof five (5) consecutive fiscal years (the “Eligible Period”) that corresponds to the period of theMedium-Term Management Plan of the Company; provided, however, that the initial Eligible Period for
the Plan starting from the current fiscal year will be for a period of four (4) fiscal years from the fiscal
year ending March 31, 2018 to the fiscal year ending March 31, 2021, which corresponds to theremaining period of the ongoing Medium-Term Management Plan.
In the event that any period of the Trust is extended by amending the trust agreement and making
additional contributions to the Trust (See Item (4) b) below), the Eligible Period will be successive fivefiscal years corresponding to the then applicable Medium Term Management Plan.
(2) Resolution by Shareholders Meeting on introducing the Plan
The upper limit of the funds contributed to the Trust, total number of shares to be delivered to the
Directors and Officers and other necessary conditions will be decided at the 10th Shareholders Meeting.
In the case of extending the trust period by amending the trust agreement and making additional
contributions to the Trust (See Item (4) below), the Board of Directors Meeting will decide conditions
for the extended Trust within the limit of compensation approved at the 10th Shareholders Meeting.
(3) Eligibility under the Plan (beneficiary conditions)
3

The Directors & Officers who are confirmed to satisfy the beneficiary conditions* by applicable
procedures will, at the time of their retirement, receive the Company’s shares for 70% of the Number of
Cumulative Points (as defined in Item (5) below) (shares of less than one trading unit will be roundedup), and cash equivalent to the amount obtained by converting the remaining number of the Company's
shares into cash within the Trust.
* Beneficiary conditionsa)Incumbent as a Director or Officer during the Eligible Period at or after the start of the Plan(includes persons who are newly appointed the Directors & Officers at or after the start of
the Plan)b)

Is retired from the position of a Director or Officer of the Company (See Note [1] and [2])c)Has not conducted certain illegal activities during time in his/her officed)

The Number of Cumulative Points for him/her has been determinede)Other conditions requisite to achieve the intents of the performance-linked stockcompensation plan (See Note [3])Note: [1] A Director and/or Officer who resigned voluntarily for his/her personal reason or weredismissed due to a justifiable reason of dismissal will be excluded from the eligible
Directors & Officers.
[2] If the Trust is extended in accordance with Item (4) c) and such extended trust period
expires, then the Trust terminates at the time of expiration, and the Directors and Officers
who are still in service at the time of termination will receive the Stock Compensation eventhough he or she does not retire.
[3] In the event that a Director or Officer, who satisfied beneficiary conditions, passes away
during the trust period, his or her successor will receive the cash equivalent of theCompany’s shares that correspond to the Number of Cumulative Points after being
converted from the Company's shares into cash within the Trust.

In the event that a

Director or Officer, who satisfies beneficiary conditions, is posted overseas and becomes a
non-resident of Japan during the trust period, he/she will receive the cash equivalent of theCompany’s shares that correspond to the Number of Cumulative Points after being
converted from the Company's shares into cash within the Trust.

(4) Trust Perioda)b)Initial trust period:
The initial trust period will be approximately four (4) years from August 2017 (planned) to August2021 (planned).
Continuation of the Trust:At the expiration of the trust period of the Trust, the Trust may continue, modifying the trust
agreement and making additional contributions to the Trust. In such a case, the trust period of
the Trust will be extended for additional five (5) years. For each extended trust period, theCompany will make additional contributions within the limit of compensation approved at the 10th
Shareholders Meeting, and continue to grant points to the Directors & Officers in accordance withthe levels of achievement of performance targets under the Medium-Term Management Plan orother similar management plans of the Company applicable for the extended trust period. If theCompany’s shares (excluding the Company’s shares corresponding to the points granted to the
Directors & Officers that are not delivered) and/or cash (collectively, the “Remaining Stock
Compensation”) remain in the trust assets as of the final day of the trust period prior to extension,
additional contributions will be made so that the total amount of the Remaining Stock4c)Compensation and the additional contributions will not exceed the limit of compensation approvedby the 10th Shareholders Meeting. The extention will not be limited to once but may be repeated.
Extension of trust period not accompanied by additional contributions:
If the trust agreement should not be modified and additional contributions to the Trust should not
be made at any expiration of the trust period, the Trust terminates and any point will not be
granted to the Directors & Officers thereafter; provided, however, that if a Director or Officer, who
may satisfy beneficiary conditions, is still in service at the time of expiration, the trust period of
the Trust may be extended for some period of time.

(5) The Stock Compensation subject to the Delivery to Directors & Officers
On July 1st immediately following the end of each fiscal year during the trust period (the first fiscal year
will end on March 31, 2018), the Company will grant points to the Directors & Officers who are inservice at the end of such fiscal year (including a Director or Officers who has retired at the end of the
fiscal year due to expiration of term of his/her office). The number of points to be granted to the
Directors & Officers will be determined according to the position rank of each of the Directors &Officers and levels of achievement of performance targets. (See Note [1]) Delivery of the Stock
Compensation will be made corresponding to the cumulative granted points (the “Number of
Cumulative Points”) of said the Directors & Officers at the time of retirement (if a Director or Officer
passes away, after his/her death).
One (1) point is equivalent to one (1) share of the Company. In the event that the number of theCompany’s shares increases or decreases due to a share split, gratis share allotment, reverse share split
or the like regarding shares during the trust period, the number of the Company’s shares (including thosesubject to conversion into cash) delivered per point will be adjusted according to the ratio of the increaseor decrease.
Note: [1]For the Initial Eligible Period, consolidated revenue and net profit attributable to owners of theCompany will be used as indicators to evaluate the levels of achievement of performancetargets, and each indicator fluctuates from 0% to 200% depending on the levels of achievementof performance targets.

(6) Upper limit of funds contributed to the Trust and upper limit of the number of the Stock
Compensation (including a part of such shares to be converted into cash）
Upper limit of funds contributed by the Company to the Trust and upper limit of the number of points
granted to the Directors & Officers in the Trust will be, subject to approval by resolution of the 10th
Shareholders Meeting, as shown the chart below; provided that upper limit of funds initially contributed
to the Trust during the trust period will be ¥720 million. (See Note [1] and [2])Note: [1] In the case of continuing the Trust in accordance with Item (4) B above, upper limit offunds will be ¥900 million[2] Upper limit of funds for the Trust is calculated from the amount of money to acquireCompany shares and fees and expenses to maintain the Trust, taking into accountcompensation level of Directors & Officers.

The maximum number of points granted to the Directors & Officers for each fiscal year will be 160,000
points. (See Note [3] and [4])Note:[3] The maximum number of points to be granted to the Directors & Officers was establishedwith mainly reference to the current stock pricesof the Company’s shares, in considerationof the maximum amount of entrusted funds mentioned above.

5[4] The maximum number of the Stock Compensation to be delivered from the Trust will be
640,000 shares which corresponds to a number of the upper limits of the total points
granted to Directors & Officers for one fiscal year multiplied by four (4), i.e. years of theinitial trust period.

Where the Trust continues in accordance with Item (4) B above, thenumber of shares to be acquired during the extended trust period will not exceed 800,000
shares which are a number of the upper limits of the total points granted to Directors &Officers for one fiscal year multiplied by five (5), i.e. years of extended trust period.
Upper limit of funds contributed to the Trust
Upper limit of the total number of points to be
granted to Directors & Officers
Upper limit of the Stock Compensation to bedelivered from the Trust

Initial:¥720million（per four (4) years）

Extended:¥900 million（per five (5) years）

160,000 points (per fiscal year)
Initial:

640,000 shares (per four (4) years)

Extended:

800,000 shares (per five (5) years)(7) Methods of acquisition of the Company’s shares by the Trust
The Company’s shares acquired by the Trust are initially to be acquired from the stock market, within
the respective upper limits of funds contributed to the Trust and the Stock Compensation.
(8) Method and timing of Delivery of the Stock Compensation, to Directors & Officers
The Directors & Officers who satisfy beneficiary conditions stated in Item (3) above need to takenecessary procedures to formally confirm his/her status as beneficiaries, and thereafter receive theCompany’s shares for 70% of the Number of Cumulative Points (shares of less than one trading unit will
be rounded up), and cash equivalent to the amount obtained by converting the remaining number of theCompany's shares into cash within the Trust. Please refer to “Note [3] of (3)” above to see conditions
for a Director or Officer who satisfied beneficiary conditions, but passed away during the trust period or
becomes a non-resident in Japan.
(9) Voting rights for the Company’s shares within the Trust
Voting rights in the Company’s shares within the Trust will not be exercised during the trust period, inorder to ensure objectivity in management of the Company.
(10) Dividends of the Company’s shares in the Trust
Dividends paid on the Company’s shares in the Trust will be received by the Trust and appropriated for
purposes of trust fees and trust expenses.
(11) Residual shares and dividends upon the expiry of the trust period
If there are remaining shares at the expiry of the trust period due to non-achievement of performancetargets or any other reason (in the case of extension of the Trust as per Item (4) b) above, the expiry of
the trust period thus extended), the Trust may transfer the said remaining shares to the Company without
consideration, and the Company may cancel such shares as a measure on shareholder returns by aresolution of the Board of Directors.
In the event that the Trust is extended after the expiry of a trust period, the residual dividends from theCompany‘s shares in the Trust remaining at the time of expiry will be used as funds for purchasing
Company’s shares. The Company intends that if the Trust terminates concurrently with expiry of thetrust period, the Company will donate the residual dividends in excess of the reserve for trust expenses
to the third parties having no vested interest with the Company or its Directors & Officers.

6

（Reference）【Details of the trust contract】
i.
Type of trust
Trust of money other than a specified individually operated monetarytrust (third party beneficiary trust)ii.

Purpose of trust

Granting of incentives to Directors & Officers

iii.

Settlor

The Company

iv.

Trustee

Mitsubishi UFJ Trust and Banking Corporation (planned)(Co-trustee: The Master Trust Bank of Japan, Ltd.)(planned)v.

Beneficiary

Directors & Officers who have retired from office and who fulfill
beneficiary requirements

vi.

Trust caretakerA third parry having no vested interest with the Company ( certified
public accountant)vii.

Trust contract dateAugust 3, 2017 (planned)

viii.

Trust period

August 3, 2017 (planned) to the end of August, 2021 (planned)ix.

Starting date of plan

August 3, 2017 (planned)(Granting of points to start from June 2018 (planned)x.

Exercise of voting

Not to be exercisedrightsxi.

Class of shares to be

Common shares of the Company

acquiredxii.

Upper limit of trust¥720 million (planned) (including trust fees and expenses)

money
xiii.

Period of acquiring

August 8, 2017(planned) to September 22, 2017 (planned)

sharesxiv.

Method of acquisition

To be acquired from the stock marketof shares
xv.

Rights holder

The Company

xvi.

Residual assets

Residual assets that may belong to the Company as the rights holder will
be within the scope of reserve for trust expenses, after deduction offunds for purchasing shares from the trust fund.

【Details of administrative tasks related to trust and shares】
i.
ii.

Administrative tasks

Mitsubishi UFJ Trust and Banking Corporation is to become a trustee ofrelated to trust

the Trust and to handle administrative tasks related to the Trust.

Administrative tasks

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. is to handle

related to sharesadministrative tasks for the delivery of shares of the Company tobeneficiaries, in accordance with a service agreement.
End7