News Release

Continuation of the Stock Compensation Plan for Directors and the Stock Grant System
for Company Management in Japan in 2023
Osaka, JAPAN, May 11, 2023 – Takeda Pharmaceutical Company Limited (TSE:4502/NYSE:TAK)(“Company”) announced that the meeting of the Board of Directors held today resolved to continue thestock compensation plan which was introduced as a long-term incentive plan for members of the Boardof Directors (the “Directors”) in 2016, as well as to continue the stock grant system which wasintroduced in 2014 as a global long-term incentive plan for Company Management in Japan (collectively
with the stock compensation plan for Directors, the “Plans”).
1.

Outline of the Plan

(1) Outline of the stock compensation plan for Company Directors(i) The Company introduced the stock compensation plan for Company Directors in 2016. Specifically,for Directors who are not members of Audit and Supervisory Committee (excluding External Directors
and Directors residing overseas), a highly transparent and objective stock compensation plan that isclosely linked to company performance has been adopted in order to improve the Company’s mid- andlong-term performance as well as to raise awareness of the need to help increase the Company’s value,
and on the other hand, for Directors who are members of Audit and Supervisory Committee and External
Directors, a highly transparent and objective stock compensation plan that is not linked to company
performance has been adopted, in order to ensure that their compensation is within the appropriate scopein consideration of the role to be fulfilled by them, and to thereby further promote their awareness of
sharing common interests with shareholders and contributing to the increase of the corporate value of
the Company, while ensuring their adequate supervisory functions which judge the validity of theexecution of duties from an objective standpoint. (*1) (*2)(ii) The stock compensation plan for Company Directors utilizes a mechanism called a Board Incentive
Plan Trust (“BIP Trust”) under which a BIP Trust will be established for Directors or will be continued
by extending the trust term of the BIP Trust already established in the previous year.
(iii) The BIP Trust is an incentive plan for Directors that is designed based on Performance Share Units
and Restricted Stock Units, whereby Performance Share Unit awards and Restricted Stock Unit awards
are granted to Company Directors. The Company shares that are acquired by the BIP Trust and theamount of money equivalent to Company shares converted into cash (collectively, “Company Shares ”)
will be vested in (a) Directors eligible for Performance Share Unit awards based on the achievement ofcompany performance goals and other factors and (b) Directors not eligible for Performance Share Unitawards in a set amount regardless of the achievement of company performance goals and other factors,
respectively, along with dividends from Company shares.
(*1)

The compensation for Directors who are not members of Audit and Supervisory Committee (excluding External
Directors) consists of “Basic Compensation,” “Bonus,” “Performance Share Unit awards”, and “Restricted Stock
Unit awards.” The compensation for Directors who are members of Audit and Supervisory Committee and External
Directors consists of “Basic Compensation” and “Restricted Stock Unit awards” linked only to the price of Company
shares and not linked to company performance.

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(*2)

The Company has established the Compensation Committee with all the Committee members being External
Directors, to serve as an advisory organization for the Board of Directors to ensure the appropriateness of Directors’compensation and transparency in the decision-making process thereof. The continuation of the stock compensation
plan was deliberated at the Compensation Committee prior to the resolution by the Board of Directors. The
evaluation of the achievement of company performance goals and other factors will be reported to the Board of
Directors after being approved by the Compensation Committee.

The stock compensation plan for Company Directors is comprised of plans for (a) Directors who are notExternal Directors (excluding Directors who are members of Audit and Supervisory Committee andDirectors residing overseas) (“Plan I”), (b) External Directors (excluding Directors who are members of
Audit and Supervisory Committee) (“Plan II”), and (c) Directors who are members of Audit andSupervisory Committee (“Plan III”).
Directors who are not members of
Audit and Supervisory Committee
Internal Directors

Directors who are members of
Audit and Supervisory Committee

External Directors

Directors eligible for
Performance Share UnitawardsExternal Directors

Directors not eligible for Performance Share Unit awards

Plan I

Plan II

Plan III

Compensations under Plan I will consist of Performance Share Unit awards (60%), where Company
Shares are vested based on the achievement of company performance goals and other factors, andRestricted Stock Unit awards (40%) in which a specified number of Company Shares vested each year.
Company performance goals are linked with mid- to long-term company performance goals (targets forthe period ending in March of the third fiscal year from now) and adopt targets involving theachievement of transparent and objective indicators, such as consolidated revenue, free cash flow,
indicators on profit, R&D targets. Based on factors including the achievement of company performancegoals, a performance linked coefficient which varies within the scope of 0 to 200% will be used to
calculate the Company Shares to be vested as the “Performance Share Unit awards”. Evaluation offactors including the achievement of company performance goals is reported to the Board of Directors
after being approved by the Compensation Committee. A two-year holding period is set for vested
Company Shares.
(Time of vesting of the Company Shares and the holding period of the Company shares regarding Plan
I)
Performanc
e ShareUnitawards(60%)

Restricted
Stock Unitawards(40%)

2023
Grant ofbase points
Performance evaluation
periodGrant ofbase points

2024

2025

2026

Performance
evaluation
periodPerformance
evaluation
periodVesting of theCompany
SharesVesting of theCompany
Shares (1/3)

Holding period for the vested
Company shares
Vesting of theCompany
Shares (1/3)

2027

2028

Holding period for the vested
Company shares

Holding period for the vested
Company shares
Vesting of theCompany
Shares (1/3)

Holding period for the vested
Company shares

Compensations under Plan II and Plan III will consist of Restricted Stock Unit awards only, in which a
specified number of Company Shares is vested three (3) years after the date when base points which will2

be the basis for calculation will be granted. 75% of vested shares are required to be held until ceasing
service as a director.
(Time of vesting of the Company Shares and holding period of the Company shares regarding Plan II
and Plan III)
2023
Restricted Stock
Unit awards (100%)(2)Grant ofbase points

2024

2025

2026
Vesting oftheCompany
Sharesuntil ceasing service
as a director
Holding period for thevested Company shares(75% of the Company
shares vested)

Outline of the Stock Grant System for Company Management in Japan(i)
The Company introduced this system in 2014 for Company Management as a highly transparent
and objective incentive plan that is closely linked to company performance. The purpose of this system
is to improve the Company’s mid- and long-term performance as well as raise awareness of the need toenhance the Company’s value. This system is expected to have the effects of encouraging Company
Management to work together under the global framework and of raising their awareness of the need to
improve the Company performance. Company Shares corresponding to the job positions of therespective Management personnel, the achievement of performance goals, and other factors will bevested along with the dividends deriving from the vested Company shares subject to having completed
one year or longer of continued service in principle. This system thereby grants mid- and long-term
incentives for improvement of the Company’s value to each member of the Management personnel andis expected to increase the effect of retaining Management.
(ii)
The stock grant system for Company Management in Japan utilizes a mechanism called a Stock
Grant ESOP (Employee Stock Ownership Plan) Trust (“ESOP Trust”) under which an ESOP Trust willbe established for Company Management in Japan or will be continued by extending the trust term of
the ESOP Trust already established in the previous year.
(iii)
The ESOP Trust is an employee incentive plan designed based on Restricted Stock Units andPerformance Share Units, whereby Restricted Stock Unit awards and Performance Share Unit awards
are granted to Company Management in Japan. Restricted Stock Unit awards and Performance Share
Unit awards are granted to certain members of senior management in Japan, while Restricted Stock Unitawards are granted to the remainder of Company Management in Japan. Company Shares that are
acquired by the ESOP Trust will be vested in Company Management in Japan based on their job
positions, the achievement of performance goals and other factors, along with dividends deriving fromvested Company shares. At a specific time period during the trust term, Company Shares will be vested
in Company Management along with dividends deriving from Company shares that have vested under
this system.
2.

Continuation of the Plans

As described later, the Company will use the trust terms of the BIP Trust and the ESOP Trust that werealready established, continue the Plans in 2023. The Company also plans to continue the same type of
incentive plans as the Plans in the next year and thereafter by either establishing a new BIP Trust and a
new ESOP Trust or changing the existing BIP Trusts and ESOP Trusts, and entrusting additional money.
The stock compensation plan for Company Directors to be implemented in the next year and thereafter
will be determined by a resolution of the Board of Directors within the scope approved by the 143rd
Ordinary General Meeting of Shareholders held on June 27, 2019.
(1)

Extension of Trust Term

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The Company will extend the trust terms of the BIP Trust and the ESOP Trust (collectively, the “Trusts”)
that were established in 2020 and scheduled to end on August 31, 2023 for three years up to August 31,
2026. If, upon extension of the trust terms, there are any Company shares remaining in the trust property(excluding Company shares corresponding to the balance of the share conversion points granted to
Directors and employees and not yet vested) and any cash money (“Residual Cash”), they will be takenover by the Trusts after extension.
(2)

Plan Period

The Plan Period of the respective Trusts shall be three years from fiscal year ending March 31, 2024(“the Plan Period”) up to fiscal year March 31, 2026, during which Company Share are vested. As for
the ESOP Trust, the Company might use Company Shares in the ESOP Trusts, which were establishedin previous years for the same purpose, for the vesting corresponding to the Plan Period.
(3)

Planned amount of trust money to be additionally entrusted to the Trusts and maximum total
number of Company Shares to be vested from the BIP Trust

The Company plans to additionally entrust 2.4 billion yen of trust money to the BIP Trust of the Trusts
and to allocate the amount of such trust money plus Residual Cash to be taken over from the existing
BIP Trust to funds to acquire additional shares by the BIP Trust and to pay trust fees and trust expenses.
The above-mentioned planned amount is the amount of funds to acquire shares calculated considering
the basic remuneration of current Directors plus trust fees and trust expenses.
Under the stock compensation plan, the total number of Company Shares to be vested by the BIP Trust
during the extended trust term shall be limited to the whole number obtained by dividing 5 billion yen(4.5 billion yen for Plan Ⅰ, 0.3 billion yen for Plan II, and 0.2 billion yen for Plan III), which is the upper
limit of money contributed by the Company to the BIP Trust within the range approved by the 143rd
Ordinary General Meeting of Shareholders held on June 27, 2019, by the closing price of the Company
shares on the Tokyo Stock Exchange on July 1 of the year in which the trust terms of the BIP Trust areextended (if there is no closing price for such date, then the closing price on the date on which atransaction was performed immediately prior to such date (any fraction less than 1 yen shall be roundeddown) (however, if Company shares are increased or decreased due to a share split, share allotment
without contribution, or share consolidation, they will be adjusted in a reasonable manner).
For the ESOP Trust of the Trusts, the Company will not additionally entrust nor acquire additional shares
upon the continuation of the plan.
(4)

Manner of acquisition of Company shares by the Trusts

For the BIP Trust of the Trusts, it is planned to additionally acquire Company shares from the stock
market within the funds to acquire additional shares in (3) above.
3.

Structure of the Trusts

Please refer to 3-1 for details of the BIP Trust and 3-2 for details of the ESOP Trust.

4(3-1)

Structure of the BIP Trust (extension)(1) Resolution by the Board of Directors(7) Voluntary conveyanceand cancelation ofremaining shares(8) Granting of residual
properties[Trustor]
Company(4) Dividends(7) Continuous
utilization ofCompany BIP Trust(3) Company shares
Stock Market(2) Establishing theCompany BIP Trust[Trustee]
Mitsubishi UFJ Trust andBanking Corp.
(Co-trustee: The Master Trust
Bank of Japan, Ltd.)
Company BIP Trust
Company shares and money(3) Payment of the price

Policy on Stock
Compensation
Plan for Directors(6) Vesting ofCompany shares andcash payout[Beneficiary]Company Directors(5) Direction not to exercise voting rights
Trust
Administrator(1) The Company resolved to continue the stock compensation plan in 2023 by the Board of Directors meeting.
(2) For Directors who are not members of Audit and Supervisory Committee and those who are, the Company
extends the trust term of the BIP Trust already established (“Company BIP Trust”) wherein Mitsubishi UFJ
Trust and Banking Corporation is a Trustee and Company Directors who meet the beneficiary requirements
are Beneficiaries, and it entrusts additional money to the Company BIP Trust to the extent approved by the
resolution at the Shareholders’ Meeting.
(3) The Trustee (of the Company BIP Trust) acquires Company shares from the stock market using money
contributed in procedure (2) in accordance with the directions of the Trust Administrator.
(4) Dividends will be paid for Company shares under the Company BIP Trust as well as for other Company
shares.
(5) Voting rights will not be exercised during the trust term with regard to Company shares under the Company
BIP Trust.
(6) During the trust term, pursuant to the polices on the stock compensation plan of the Company, Beneficiaries
will receive Company shares equivalent to a certain ratio of share conversion points after the points havebeen granted. Meanwhile, Company shares in a number equivalent to the remaining share conversion points
will be converted into cash in the Company BIP Trust determined by the provisions of the trust agreement
and Beneficiaries will receive the monetary equivalent (dividends deriving from Company shares will also
be paid to Beneficiaries corresponding to the number of Company Shares to be vested by the Company BIP
Trust).
(7) If there are residual shares at the expiry of the trust term due to non-achievement of performance goals,
resignation because of his/her own convenience, dismissal or for other reasons during the trust term, theCompany BIP Trust may continue to be used as a type of incentive plan similar to the stock compensation
plan by changing the trust agreement and entrusting additional money to the Company BIP Trust, or theCompany BIP Trust may voluntarily convey the said residual shares to the Company and the Company may
acquire them without payment and cancel the residual shares by a resolution of the Board of Directors
meeting.
(8) Residual properties after distribution to Beneficiaries at the end of the Company BIP Trust will belong to
the Company to the extent of allowances for trust expenses, which are calculated by deducting the funds toacquire Company shares from the trust money. The portion exceeding the allowances for trust expenses will
be donated to groups that have no conflict of interest with the Company and the Company Directors andofficers.

(Note) If there are no Company shares under the Company BIP Trust due to the vesting of Company Shares in Beneficiaries,
the Company BIP Trust will be discontinued before expiry of the trust term. The Company may entrust additional
money to the Company BIP Trust as funds to acquire Company shares, and the Company BIP Trust may acquire
additional Company shares to the extent of funds necessary to acquire shares that were approved by resolution of the
143rd Ordinary General Meeting of Shareholders held on June 27, 2019, and to the extent of the upper limit number
for the vesting of shares set for Plans I, II and III.

5

(Reference)[Trust Agreement]
BIP Trust(1) Type of Trust:(2) Purpose of Trust:(3) Trustor:(4) Trustee:(5) Beneficiaries:(6) Trust administrator:(7) Date of trust agreement:(8) Trust term:(9) Start of the Plan:(10) Exercise of voting rights:(11) Type of acquired shares:(12) Total amount of shares to beacquired:(13) Time to acquire shares:(14) Manner of share acquisition:(15) Vested rights holder:(16) Residual properties:

Money trust other than a specified money trust for separate
investment (Third party benefit trust)
To grant incentives to Directors.
The Company
Mitsubishi UFJ Trust and Banking Corporation(Co-trustee: The Master Trust Bank of Japan, Ltd.)
Person(s) who meet beneficiary requirements among Directors
A third person who has no conflict of interest with theCompany (Certified public accountant)August 4, 2014 (an amendment agreement is scheduled to be
executed regarding the extension of the trust term as of May
2023)
From August 4, 2014 to the end of August 2023 (the trust termis scheduled to be extended to the end of August 2026 basedon the amendment agreement executed as of May 2023)
July 1, 2023 (scheduled)
No voting rights will be exercised.
Common Company shares
2.4 billion yen (scheduled) (including trust fees and trust
expenses)
From May 18, 2023 (scheduled) to May 31, 2023 (scheduled)(excluding the five (5) business days before the end of eachfiscal period (including the quarterly fiscal period))
To be acquired from the stock market.
The Company
Residual properties that the Company, which is the holder ofvested rights, can receive are within the extent of allowances
for trust expenses, which are calculated by deducting funds toacquire Company shares from the trust money.

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(3-2)

Structure of the ESOP Trust (extension)(1) Resolution to continue by the Board of Directors[Trustor]
Company(6) Voluntary conveyance andcancellation of remaining
shares.

(3) Dividends

Policy on LongTerm Incentive Plan
to Employees(2) Establishing the Trust(6) Continuous
utilization of the
Trust

Stock Market

Company shares[Trustee]
Mitsubishi UFJ Trust andBanking Corp.
(Co-trustee: The Master Trust
Bank of Japan, Ltd.)ESOP Trust
Company shares and money(5) Vesting ofCompany shares andcash payout[Beneficiary]Company Management(4) Direction not exercising voting rights
Payment of the price

Trust
Administrator(1) The Company resolved to continue the Stock Grant System in 2023 by the Board of Directors meeting.
(2) The Company extends the trust term of the ESOP Trust already established (“Company ESOP Trust”)
wherein Mitsubishi UFJ Trust and Banking Corporation is a Trustee and Company Management in Japan
who meet beneficiary requirements are Beneficiaries, and entrusts additional money to the Company ESOP
Trust. The Company will not additionally entrust nor acquire additional shares upon the extension.
(3) Dividends will be paid for Company shares under the Company ESOP Trust as well as other Company
shares.
(4) Voting rights will not be exercised during the trust term with regard to Company shares under the Company
ESOP Trust.
(5) During the trust term, pursuant to the policies on the long term incentive plan of the Company,
Beneficiaries will receive Company shares equivalent to a certain ratio of share conversion points after the
points have been granted. Meanwhile, the Company shares in a number equivalent to the remaining shareconversion points will be converted into cash in the Company ESOP Trust determined by the provision of
the trust agreement and the monetary equivalent will be received (dividends from Company shares will
also be paid to Beneficiaries corresponding to the number of Company Shares to be vested by the Company
ESOP Trust).
(6) If there are residual shares at the expiry of the trust term due to non-achievement of performance goals orfor other reasons during the trust term, the Company ESOP Trust may continue to be used as a type of
incentive plan similar to the Stock Grant System by changing the trust agreement and by entrusting
additional money to the Company ESOP Trust, or the Company ESOP Trust may voluntarily convey thesaid residual shares to the Company and the Company may acquire them without payment and cancel theresidual shares by a resolution at the Board of Directors meeting.
(7) Residual properties after distribution to Beneficiaries at the end of the Company ESOP Trust will belong
to the Company to the extent of allowances for trust expenses, which are calculated by deducting the funds
to acquire Company shares from the trust money. The portion exceeding the allowances for trust expenses
will be donated to groups that have no conflict of interest with the Company and the Company Directors
and officers.

7

(Note) If there are no Company shares under the Company ESOP Trust due to the vesting of Company Shares in Beneficiaries,
the Company ESOP Trust will be discontinued before the expiry of the trust term.
The Company may entrust additional money to the Company ESOP Trust as funds to acquire Company shares.

(Reference)[Trust Agreement]
ESOP Trust(1) Type of Trust:(2) Purpose of Trust:(3) Trustor:(4) Trustee:(5) Beneficiaries:(6) Trust administrator:(7) Date of trust agreement:(8) Trust term:(9) Start of the System:(10) Exercise of voting rights:(11) Vested rights holder:(12) Residual properties:

Money trust other than a specified money trust for separate
investment (Third party benefit trust)
To grant incentives to Company Management in Japan.
The Company
Mitsubishi UFJ Trust and Banking Corporation(Co-trustee: The Master Trust Bank of Japan, Ltd.)
Person(s) meeting beneficiary requirements from among theCompany Management in Japan
A third person who has no conflict of interest with theCompany (Certified public accountant)
May 21, 2014 (an amendment agreement is scheduled to be
executed regarding the extension of the trust term as of May
2023)
From May 21, 2014 to the end of August 2023 (the trust termis scheduled to be extended to the end of August 2026 basedon the amendment agreement executed as of May 2023)
July 1, 2023 (scheduled)
No voting rights will be exercised.
The Company
Residual properties that the Company, which is the holder ofvested rights, can receive are within the extent of allowances
for trust expenses, which are calculated by deducting funds toacquire Company shares from trust money.

Media Contacts:
U.S. and International
Megan Ostrower
Megan.ostrower@takeda.com+1 (772) 559-4924
Japan
Jun Saito
jun.saito@takeda.com+81 (0) 3-3278-2325

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About Takeda
Takeda is focused on creating better health for people and a brighter future for the world. We aim to
discover and deliver life-transforming treatments in our core therapeutic and business areas, including
oncology, rare disease, neuroscience, gastrointestinal and inflammation, plasma-derived therapies andvaccines. Together with our partners, we aim to improve the patient experience and advance a newfrontier of treatment options through our dynamic and diverse pipeline. As a leading values-based,
R&D-driven biopharmaceutical company headquartered in Japan, we are guided by our commitment topatients, our people and the planet. Our employees in approximately 80 countries and regions are driven
by our purpose and are grounded in the values that have defined us for more than two centuries. For
more information, visit www.takeda.com.
Important Notice
For the purposes of this notice, “press release” means this document, any oral presentation, any question
and answer session and any written or oral material discussed or distributed by Takeda Pharmaceutical
Company Limited (“Takeda”) regarding this release. This press release (including any oral briefing andany question-and-answer in connection with it) is not intended to, and does not constitute, represent orform part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe
for, exchange, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in
any jurisdiction. No shares or other securities are being offered to the public by means of this press
release. No offering of securities shall be made in the United States except pursuant to registration under
the U.S. Securities Act of 1933, as amended, or an exemption therefrom. This press release is being
given (together with any further information which may be provided to the recipient) on the condition
that it is for use by the recipient for information purposes only (and not for the evaluation of any
investment, acquisition, disposal or any other transaction). Any failure to comply with these restrictions
may constitute a violation of applicable securities laws.
The companies in which Takeda directly and indirectly owns investments are separate entities. In thispress release, “Takeda” is sometimes used for convenience where references are made to Takeda and its
subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries
in general or to those who work for them. These expressions are also used where no useful purpose isserved by identifying the particular company or companies.
Forward-Looking Statements
This press release and any materials distributed in connection with this press release may containforward-looking statements, beliefs or opinions regarding Takeda’s future business, future position andresults of operations, including estimates, forecasts, targets and plans for Takeda. Without limitation,
forward-looking statements often include words such as “targets”, “plans”, “believes”, “hopes”,“continues”, “expects”, “aims”, “intends”, “ensures”, “will”, “may”, “should”, “would”, “could”“anticipates”, “estimates”, “projects” or similar expressions or the negative thereof. These forwardlooking statements are based on assumptions about many important factors, including the following,
which could cause actual results to differ materially from those expressed or implied by the forwardlooking statements: the economic circumstances surrounding Takeda’s global business, including
general economic conditions in Japan and the United States; competitive pressures and developments;changes to applicable laws and regulations, including global health care reforms; challenges inherent in
new product development, including uncertainty of clinical success and decisions of regulatory
authorities and the timing thereof; uncertainty of commercial success for new and existing products;
manufacturing difficulties or delays; fluctuations in interest and currency exchange rates; claims orconcerns regarding the safety or efficacy of marketed products or product candidates; the impact ofhealth crises, like the novel coronavirus pandemic, on Takeda and its customers and suppliers, including
foreign governments in countries in which Takeda operates, or on other facets of its business; the timing
and impact of post-merger integration efforts with acquired companies; the ability to divest assets thatare not core to Takeda’s operations and the timing of any such divestment(s); and other factors identified
in Takeda’s most recent Annual Report on Form 20-F and Takeda’s other reports filed with the U.S.
Securities
andExchange
Commission,
availableon
Takeda’s
websiteat:https://www.takeda.com/investors/sec-filings/ or at www.sec.gov. Takeda does not undertake to update
any of the forward-looking statements contained in this press release or any other forward-looking

9statements it may make, except as required by law or stock exchange rule. Past performance is not anindicator of future results and the results or statements of Takeda in this press release may not be
indicative of, and are not an estimate, forecast, guarantee or projection of Takeda’s future results.
###

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