Daiichi Sankyo : Announces the Introduction of a Trust-type Share-based Compensation System for its Directors, etc.

Company name: DAIICHI SANKYO COMPANY, LIMITED

Representative: Sunao Manabe, Representative Director, President and CEO (Code no.: 4568, First Section, Tokyo Stock Exchange)

Please address inquiries to Junichi Onuma, Vice President, Corporate Communications Department Telephone: [phone] https://www.daiichisankyo.com

Daiichi Sankyo Announces the Introduction of

a Trust-typeShare-based Compensation System for its Directors, etc.

Tokyo, Japan (May 13, 2021) - Daiichi Sankyo Company, Limited (hereafter "Daiichi Sankyo" or the "Company") announced that, it reviewed its executive compensation system and at a meeting of its Board of Directors held today, it decided to introduce a trust-typeshare-based compensation system (the "Compensation System"), which has the nature of globally prevailing performance share plans (performance-based), as a new incentive plan for its Directors (excluding Outside Directors) and Corporate Officers (collectively "Directors, etc."). The introduction aims to set the compensation level suitable for aiming at the high level in the industrial sector, and to increase the variable compensation ratio in order to strengthen the incentives that motivate further increase of the value for the Company. Daiichi Sankyo will submit a proposal regarding the introduction of the Compensation Plan to the 16th Ordinary General Meeting of Shareholders scheduled for June 21, 2021 ("this General Meeting of Shareholders"). The details are stated as follows.

1. Purpose and Conditions Regarding Introduction of the Compensation System

1. Daiichi Sankyo will introduce the Compensation System in order to clarify the linkage between the compensation of the target Directors, etc. and the share value for the Company, and raise the awareness of contribution to the increase of the medium- to long-term performance of the Company as compensation linked to the achievement of the performance of the mid-term business plan and the increase of the value for the Company, and to promote sharing of interests with shareholders.
2. The Compensation System adopts a structure called the executive compensation BIP (Board Incentive Plan) trust ("BIP Trust"). A BIP Trust is, as is the case for performance share plans and restricted share plans in Europe and the U.S., a plan under which Daiichi Sankyo's shares and money equivalent to the converted

1

value of such shares ("Daiichi Sankyo's Shares, etc.") are delivered or paid ("Delivered, etc.") to the target Directors, etc. according to their position, the degree of achievement of targets set forth in business plans and other criteria.

1. The introduction of the Compensation System is subject to approval of this General Meeting of Shareholders.

2

2. Structure of the Compensation System

1. Resolution at this General Meeting of Shareholders

[Settlor]

Daiichi Sankyo

1. Continued use or gratis transfer and
   cancellation of residual shares

				(ii) Establishment of the
(ix) Continued	use or	(v) Dividend	(iii) Establishment of a trust	share delivery rules
transfer of	residual
assets

(iv)Daiichi Sankyo's shares

Stock market

(iv)Payment of the acquisition price

	[Trustee (Co-trustee)](planned)	(vii)Delivery of Daiichi
	Mitsubishi UFJ Trust and Banking	Sankyo's shares and
	monetary payment
	Corporation
(The Master Trust Bank of Japan, Ltd.)		[Beneficiaries]
	BIP Trust		Target Directors, etc.
	Daiichi Sankyo's shares and money
	(vi)Instruction not to exercise voting rights

Trust administrator

1. Daiichi Sankyo will obtain a resolution of approval for executive compensation in relation to the introduction of the Compensation System at this General Meeting of Shareholders.
2. Daiichi Sankyo will establish the share delivery rules pertaining to executive compensation in relation to the introduction of the Compensation System at a meeting of the Board of Directors.
3. Daiichi Sankyo will contribute money within the upper limit as approved by the resolution at this General Meeting of Shareholders as in (i) to establish a BIP Trust (the "Trust") wherein the target Directors, etc. who meet the beneficiary requirements shall be beneficiaries.
4. The Trust will acquire Daiichi Sankyo's shares from the stock market using the money entrusted in (iii) in accordance with the instructions of the trust administrator. The number of shares to be acquired by the Trust shall be within the upper limit as approved by the resolution at this General Meeting of Shareholders as in (i).
5. Dividend will be paid on Daiichi Sankyo's shares held by the Trust in the same manner as for other shares in Daiichi Sankyo.
6. Voting rights of Daiichi Sankyo's shares held by the Trust shall not be exercised throughout the trust period.
7. During the fiscal year covered by our mid-term business plan (hereinafter referred to as the "Target Period"), a certain number of points will be awarded every year to the target Directors, etc. who meet the beneficiary requirements in accordance with the share delivery rules. Subsequently, Daiichi Sankyo's Shares, etc. will be Delivered, etc. to them from the Trust based on the number of points calculated by multiplying the number of points accumulated over the Target Period by the performance-based coefficient ("Share Delivery Points").

3

1. If residual shares remain at the expiration of the trust period due to non-achievement of targets during the trust period or any other reason, the Trust may continue to be used as the Compensation System or as a share-based Compensation System of the same type by amending the trust agreement and making additional contributions to the Trust by resolution of the Board of Directors. Meanwhile, if the Trust is not continued and terminated, the Trust is planned to transfer such residual shares without consideration to Daiichi Sankyo, and Daiichi Sankyo plans to cancel such shares by resolution of the Board of Directors in order to increase shareholder return.
2. Any residual dividend pertaining to Daiichi Sankyo's shares held by the Trust that arise at the expiration of the trust period will be used as funds for share acquisition if the Trust is continued to be used. Meanwhile, if the Trust is terminated due to the expiration of the trust period, any portion exceeding the reserve for trust expenses is planned to be donated to an organization with no interest with Daiichi Sankyo or the target Directors, etc.

(Note) During the trust period, in the case where the number of shares held by the Trust might fall short of the number of shares corresponding to the number of Share Delivery Points to be awarded to each of Directors, etc. during the trust period as specified in 3. (5) below, or in the case where money in the Trust might be insufficient to pay trust fees and trust expenses, Daiichi Sankyo may entrust additional money to the Trust within the upper limit of trust money as specified in 3. (7) below.

3. Details of the Compensation System

1. Overview of the Compensation System
   The Compensation System is a share-based Compensation System in the Target Period under which Daiichi Sankyo's Shares, etc. are Delivered, etc. as executive compensation to the target Directors, etc. according to their position, the degree of achievement of performance targets set forth in the medium-term business plan and other criteria (the initial Target Period shall be five fiscal years for the 5-year business plan (Fiscal year 2021- Fiscal year 2025)). In the event that the Trust is continued as provided for in (4) (ii) below, the period corresponding to the mid-term business plan will be set as the Target Period.
   The timing at which Daiichi Sankyo's Shares, etc. are Delivered, etc. to the target Directors, etc. is after their retirement, in principle.
2. Resolution at this General Meeting of Shareholders pertaining to the introduction of the Compensation System
   At this General Meeting of Shareholders, the upper limit of trust money to be contributed to the Trust, the maximum total number of Daiichi Sankyo's Shares, etc. to be Delivered, etc. to the target Directors, etc. and other necessary matters will be resolved.
3. Persons eligible for the Compensation System (beneficiary requirements)
   The target Directors, etc. may receive Delivery, etc. of Daiichi Sankyo's Shares, etc. from the Trust in the number equivalent to the number of Share Delivery Points as stated in (5) below after their retirement, in principle, upon going through the prescribed procedures to lock in their beneficiary rights, provided that they meet the following beneficiary requirements.

4

1. The beneficiary has been a Director, etc. during the Target Period (including those who became Directors, etc. after the start of the Compensation System).
2. The number of Share Delivery Points stated in (5) below has been determined.
3. The beneficiary has resigned from the position of a Director, etc. (*)
4. The beneficiary has neither resigned for personal reasons, nor resigned or been dismissed for such reasons as having been engaged in certain illegal activities or committed a material violation of office or internal regulations or any other such rule while in office.
5. Any other requirements deemed necessary to fulfill the purpose of the Compensation System as a share-based Compensation System.

1. If the trust period is extended as described in (4) (iii) below, and persons eligible for the Compensation System are still in office as Directors, etc. at the end of the extended period, the Trust will terminate at that time and Daiichi Sankyo's Shares, etc. will be Delivered, etc. to said Directors, etc. while they are in office.

1. Trust period

1. Initial trust period
   The initial trust period shall be approximately five years from August 2, 2021 (planned) to August 31, 2026 (planned).
2. Continuation of the Trust
   The Trust may be continued beyond the trust period stated in (i) above by amending the trust agreement and making additional contributions to the Trust. In that case, the trust period of the Trust will be extended for the Target Period, and Daiichi Sankyo will make an additional contribution for each such extended period within the upper limit of trust money approved by resolution at this General Meeting of Shareholders and continue awarding points to such Directors, etc. in the Target Period. However, in the case of making such an additional contribution, if there are any Daiichi Sankyo's shares (excluding Daiichi Sankyo's Shares, etc. equivalent to the number of the Share Delivery Points awarded to the target Directors, etc. that are yet to be Delivered, etc.) and money remaining in the trust property ("Residual Shares, etc.") at the final day of the trust period prior to the extension, the sum of the amounts of Residual Shares, etc. and additional trust money to be contributed shall be within the upper limit of trust money approved by resolution at this General Meeting of Shareholders. Such extension of the trust period is not limited to once, and the trust period may be extended again in the same manner thereafter.
3. Expiration of the trust period (extension of the trust period not accompanied by additional contributions)
   In case that the trust agreement is not amended or an additional contributions are not made upon expiration of the trust period (at the expiration of the extended trust period if the Trust has been continued as stated in (ii) above), Daiichi Sankyo will not award any points to the target Directors, etc. thereafter. However, if the target Directors, etc. who might meet the beneficiary requirements remain in office at the expiration of the trust period, the Trust may extend the term of the Trust for up to ten years, without immediately terminating the Trust, until the target Directors, etc. retire and the delivery of our shares is completed.

5