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    4503   JP3942400007

ASTELLAS PHARMA INC.

(4503)
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Astellas Pharma : Corporate Governance Report

06/29/2021 | 09:02pm EDT

CORPORATE GOVERNANCE REPORT

Astellas Pharma Inc.

Date of last revision:

June 30, 2021

Astellas Pharma Inc.

Kenji Yasukawa

Representative Director, President and CEO

Contact: Corporate Advocacy & Relations Tel: 03-3244-3201 Securities Code: 4503 https://www.astellas.com/en

The status of corporate governance of Astellas Pharma Inc. ("Astellas" or the "Company") is as follows:

I

Basic Views on Corporate Governance, and Basic Information on Capital

Structure, Corporate Attributes, and Other Matters

1. Basic Views

The Company's raison d'être is to contribute to improving the health of people around the world through the provision of innovative and reliable pharmaceutical products. The Company aims to sustainably enhance enterprise value by being chosen and trusted by all stakeholders. With this business philosophy, we work to ensure and strengthen the effectiveness of corporate governance from the following perspectives:

  1. Ensuring transparency, appropriateness and agility of management; and
  2. Fulfillment of our fiduciary duties and accountability to shareholders and appropriate

collaboration with all stakeholders.

The Company has established the "Corporate Governance Guidelines" which identifies the fundamental concept and guidelines of the Company's corporate governance. Please refer to the Company's website.

https://www.astellas.com/jp/en/about/governance

[Reasons for not implementing the following principles of the Corporate Governance Code] Updated

The Company implements all the principles of the Corporate Governance Code before its revision in June 2021.

The Company plans to update the Corporate Governance Report, based on the revised Code by December 31, 2021.

[Disclosure based on each principle of the Corporate Governance Code] Updated

[Principle 1-4]

The Company does not acquire or hold the shares of other companies except in cases where such acquisition or shareholding is considered reasonable from a business strategic perspective, such as business partnership.

The rationale of each shareholding is examined annually by the Board of Directors from the viewpoint of the Company's medium- to long-term business strategies. The Company sells the shares for which there is insufficient rationale of shareholding. The Company confirms the appropriateness of continuing to hold shares on the basis of the policies below.

  • As a general rule, the Company holds shares it has acquired in connection with a business partnership for as long as the purpose of that acquisition prevails, and sells such holdings when that purpose ceases to exist.
  • The Company sells other shares based on the appropriate timing and method.

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CORPORATE GOVERNANCE REPORT

Astellas Pharma Inc.

  • The Company continues to hold shares when it is difficult to carry out the sale of the shares according to the Company's plans because of reasons such as poor liquidity.

With regard to the exercise of voting rights of shareholdings, the Company appropriately exercises them judging from the viewpoint of increasing shareholder value of the issuing company, on the condition that such exercise of the voting rights contributes to increasing the Company's enterprise value.

The Company has been reducing its shareholdings since 2005. The Company has sold 93 of the 106 stocks it had held in April 2005 (total proceeds from sales: ¥89.2 billion), 2 of which were sold during the business year ended March 31, 2021. As of March 31, 2021, the Company maintains equity holdings amounting to 22 stocks, at a recorded value of ¥27.8 billion on the balance sheet. The Company will continue to reduce its shareholdings going forward.

[Principle 1-7]

The Company endeavors to prevent officers and other personnel concerned from using their positions in order to enter into transactions that conflict with the interests of the Company or the common interests of its shareholders.

Directors intending to engage in transactions with the Company for themselves or for a third- party must receive the approval of the Board of Directors for the said transaction in accordance with the Board of Directors Policy.

[Principle 2-6]

The Company manages its corporate pension through Astellas Pension Fund, with the aim of ensuring that its employees lead secure lives into the future. In managing the pension fund, Astellas Pension Fund has established the "Basic Policies on Pension Asset Management," and makes relevant decisions by resolution of the Board of Trustees and Board of Representatives, after deliberation by the Asset Management Committee on the basis of the basic policy. The Company appropriately assigns qualified personnel such as heads of the Company's personnel and finance departments as members of the Asset Management Committee, Board of Trustees, and Board of Representatives, and also assigns personnel from labor unions to the same positions from the standpoint of providing representation for the beneficiaries. In addition, the Company appropriately assigns personnel to the Fund secretariat, while the Asset Management Committee monitors the management of the pension fund to ensure that management is carried out on the basis of the basic policy on asset management, and that there are no conflicts of interest.

[Principle 3-1]

  1. Business Philosophy, Business Strategies, Management Plan

The Company's business philosophy is composed of three basic principles - "raison d'être," "mission," and "beliefs," which is published on the Company's website. https://www.astellas.com/jp/en/about/philosophy

The Company has formulated the VISION, which is published on the Company's website. https://www.astellas.com/jp/en/about/vision-and-strategy

The Company has formulated its management plan CSP2021 (Corporate Strategic Plan) that starts from FY2021 and is published on the Company's website. https://www.astellas.com/jp/en/investors/strategic-plan

  1. The Basic Views and Guidelines of the Corporate Governance

The basic views and guidelines are identical to those listed under "I. 1 Basic Views" of this report or in "Corporate Governance Guidelines" (https://www.astellas.com/jp/en/about/governance) of the Company.

  1. Policies and Procedures on determining Remunerations for Directors

Remunerations for Directors are so designed as to enable the Company to recruit and retain

2

CORPORATE GOVERNANCE REPORT

Astellas Pharma Inc.

talents, and to make the remuneration levels and structures fully commensurate with the responsibilities of the position.

Remunerations for internal Directors who are not Audit & Supervisory Committee Members are determined based on the following factors.
  1. Competitive remuneration system

• A remuneration structure and levels that enable the Company to recruit and retain talents ii) Remuneration system that emphasizes increasing enterprise value and shareholder value

• A remuneration system and composition that are closely linked to performance with an emphasis on increasing enterprise value and shareholder value over the medium- to long-term

iii) Fair and impartial remuneration system

• A fair and impartial remuneration system based on responsibility and results regardless of country and region

Based on the factors above, remunerations for internal Directors who are not Audit & Supervisory Committee Members are to consist of basic remuneration (fixed remuneration), bonus (short-term incentive remuneration) and stock compensation (medium- to long-term incentive remuneration). Levels of remunerations are determined based on the factors such as professional responsibilities, by utilizing objective remuneration survey data of an external expert organization. The individual remuneration for internal Directors who are not Audit & Supervisory Committee Members are determined by a resolution of the Board of Directors, based on results of discussions carried out by the Compensation Committee, within the total amount resolved in the Annual Shareholders Meeting.

Remunerations for outside Directors who are not Audit & Supervisory Committee Members are to consist solely of basic remuneration (fixed remuneration), given that their roles involve supervising the Company's management from an objective and independent standpoint. Levels of basic remuneration are determined based on the factors such as professional responsibilities, in reference particularly to objective remuneration survey data of an external expert organization. The individual remuneration for outside Directors who are not Audit & Supervisory Committee Members are determined by a resolution of the Board of Directors, based on results of discussions carried out by the Compensation Committee, within the total amount resolved in the Annual Shareholders Meeting. Remunerations for internal Directors who are Audit & Supervisory Committee Members are to consist solely of basic remuneration (fixed remuneration), given that their roles involve supervising and auditing the management. Levels of basic remuneration are determined based on the factors such as professional responsibilities, in reference particularly to objective remuneration survey data of an external expert organization. The individual remuneration for internal Directors who are Audit & Supervisory Committee Members are determined by deliberation of Directors who are Audit & Supervisory Committee Members, within the total amount resolved in the Annual Shareholders Meeting. Remunerations for outside Directors who are Audit & Supervisory Committee Members are to consist solely of basic remuneration (fixed remuneration), given that their roles involve supervising and auditing the Company's management from an objective and independent standpoint. Levels of basic remuneration are determined based on the factors such as professional responsibilities, in reference particularly to objective remuneration survey data of an external expert organization. The individual remuneration for outside Directors who are Audit & Supervisory Committee Members is determined by deliberation of Directors who are

3

CORPORATE GOVERNANCE REPORT

Astellas Pharma Inc.

Audit & Supervisory Committee Members, within the total amount resolved in the Annual Shareholders Meeting.

Further details on the remuneration system for Directors are stated in the "Annual Securities Report for the Business Year Ended March 31, 2021 (16th Term)" (in Japanese). https://www.astellas.com/jp/ja/investors/ir-library/securities-report

  1. Policies and Procedures in Appointment/Removal of Senior Management and

Nomination of Candidates for Directors

Through the deliberations of the Nomination Committee, the Company enhances the transparency and objectivity of the nomination process for candidates for Director.

When nominating candidates for outside Directors, the Company, as a general rule, nominates the candidates who are considered to be independent from the Company and without risk of conflict of interest with general shareholders, based on the Company's "Independence Standards for outside Directors."

The terms of the Company's "Independence Standards for outside Directors" are identical to those stated in this report. Please also refer to the Company's website. https://www.astellas.com/jp/en/about/governance

Directors who are not Audit & Supervisory Committee Members are subject to election by resolution of the Annual Shareholders Meeting each year.

When nominating candidates for Directors who are not Audit & Supervisory Committee Members, those who satisfy the election/re-election standards separately established by the Board of Directors are nominated, and efforts are made to ensure that the composition of the Board of Directors is diverse and well-balanced from the perspectives of expertise and experience and so forth.

Candidates for Directors who are not Audit & Supervisory Committee Members are nominated by resolution of the Board of Directors with due respect to the opinions of the Nomination Committee.

Directors who are Audit & Supervisory Committee Members are subject to election by resolution of the Annual Shareholders Meeting every other year.

When nominating candidates for Directors who are Audit & Supervisory Committee Members, those who satisfy the election/re-election standards separately established by the Board of Directors are nominated, and efforts are made to ensure that the composition of the Audit & Supervisory Committee is diverse and well-balanced from the perspectives of expertise and experience and so forth, including a person with sufficient expertise on finance and accounting. Candidates for Directors who are Audit & Supervisory Committee Members are nominated by resolution of the Board of Directors with due respect to the opinions of the Nomination Committee. Proposals regarding the election of Directors who are Audit & Supervisory Committee Members are subject to the agreement of the Audit & Supervisory Committee before submission to the Annual Shareholders Meeting.

Should a Director fall under one of disciplinary categories defined in the Disciplinary Policy for Directors, the Board of Directors may, by its resolution after discussions at the Nomination Committee, make a proposal to dismiss such Director at the Annual Shareholders Meeting and/or remove such Director from the executive position.

4

CORPORATE GOVERNANCE REPORT

Astellas Pharma Inc.

Through the deliberations of the Nomination Committee, the Company enhances the transparency and objectivity of the deliberation process for appointment of CEO.

CEO is appointed by resolution of the Board of Directors with due respect to the opinions of the Nomination Committee. CEO must satisfy the following standards, and the current business environment and business strategy are also considered in the appointment process:

  1. Person who has superior insight for the future and is flexible with a rapidly changing internal and external environment.
  2. Person who is brilliant at planning, decision and execution in times of uncertainty, and is able to fulfill accountability about the decisions.
  3. Person who has such a strong personal magnetism that the person is relied on by employees

of Astellas Group of Companies and is trusted by stakeholders.

CEO is subject to appointment by resolution of the Board of Directors each year. In the case of re-appointment, in addition to the standards above set forth being satisfied, performance and contribution during the tenure as CEO are also considered.

  1. Explanation Regarding Nomination of Individual Candidates for Director

The "Notice of Convocation of the Annual Shareholders Meeting" contains reasons the Company nominates individual candidates for Director. https://www.astellas.com/jp/en/investors/shareholders-meeting

[Supplementary Principle 4-1-1]

The Board of Directors ensures the transparency and appropriateness of management by making decision of corporate management policies and corporate strategies, etc. and serving the oversight function of the execution of business. Furthermore, the Board of Directors ensures the agility of management by delegating a substantial part of decision-making authority of important business execution to an executive Director by resolution of the Board of Directors and establishing "Corporate Decision Authority Policy" to clarify the responsibility and authority for the execution of business by Top Management and others.

[Principle 4-8]

The Company adopts the organizational structure of "Company with Audit & Supervisory Committee." The Board of Directors and the Audit & Supervisory Committee each have a majority of outside Directors.

[Supplementary Principle 4-8-1]

The Company holds a regular meeting which consists only of independent outside Directors. Through the meeting, an exchange of opinions is facilitated among them, and it also serves as an opportunity for cooperation between outside Directors, full-time Audit & Supervisory Committee Members and Financial Auditors.

[Principle 4-9]

When nominating candidates for outside Directors, the Company, as a general rule, nominates the candidates who are considered to be independent from the Company and without risk of conflict of interest with general shareholders, based on the Company's "Independence Standards for outside Directors."

https://www.astellas.com/jp/en/about/governance

[Principle 4-11-1]

The Board of Directors, in consideration of diversity and balance from the perspectives of expertise and experience and so forth, is composed of a number of Directors appropriate to facilitate agility. Board of Directors meetings are chaired by the Director and Chairman of the Board (when the Director and Chairman of the Board is unable to fulfill his/her duties due to accident or vacancy of the post, another Director, in the order prescribed in the Board of Directors Policy, shall assume the role). In order to ensure decision-making from a broader

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Astellas Pharma Inc. published this content on 30 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 June 2021 01:01:03 UTC.


© Publicnow 2021
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