This document has been translated from the Japanese original for reference purpose only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.
May 12, 2026
To whom it may concern:
Company Name: Yakult Honsha Co., Ltd. Representative: Hiroshi Narita
President and Representative Director (Securities code: 2267, TSE Prime Market)
Notice Regarding Introduction of New Stock Remuneration System Following Revision of Existing System
Yakult Honsha Co., Ltd. (the "Company") announced that its Board of Directors, at a meeting held on February 10, 2026, resolved to revise the current stock remuneration system for directors and implement a new performance-based stock remuneration system (the "System"). The Company hereby announces that the Board of Directors has further resolved today to submit a proposal regarding this revision to the 74th Ordinary General Meeting of Shareholders (the "General Meeting of Shareholders") scheduled for June 24, 2026, as follows:
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Background and purpose of the revision
The Board of Directors resolved to replace the current stock remuneration system with the System for its directors (excluding outside and part-time directors) and executive officers (collectively, "Executives"), subject to the approval of shareholders regarding executive remuneration, and decided to submit a proposal regarding the revision to the General Meeting of Shareholders. The purpose of this transition is to provide incentives aimed at the sustainable enhancement of corporate value by further clarifying the link between the compensation of Executives and increases to the Company's medium- to long-term corporate value and shareholder value, while also further promoting the sharing of value between Executives and shareholders.
The following terms and specific details were approved at the 71st Ordinary General Meeting of Shareholders held on June 21, 2023, and have remained in effect to this day: the total amount of monetary remuneration claims to be paid to our directors as remuneration related to restricted stock shall not exceed 300 million yen annually, and the total number of shares to be issued or disposed of shall not exceed 150,000 shares per year. This is separate from the amount of remuneration for the Company's directors approved at the 56th Ordinary General Meeting of Shareholders held on June 25, 2008. (The Company conducted a two-for-one stock split of its common stock effective October 1, 2023. The maximum number of shares stated above reflects the adjusted number after such stock split.) However, subject to approval at this Ordinary General Meeting of Shareholders, we will abolish the remuneration framework for directors related to the above resolution and will not allocate any new restricted stock under the existing restricted stock remuneration system in the future. Nevertheless, restricted stock that has already been allocated to directors
will remain in effect.
- Overview the System
Overview of the System
The System is a stock-based remuneration system under which the Company's shares are acquired through a trust (the trust established under the System; the "Trust") using funds contributed by the Company, and in which the Company's shares and cash equivalent to the market value of such shares ( "Company Shares and Cash") are granted to Executives through the Trust in accordance with the Company's Rules on Stock Remuneration for Executives. Under the System, shares will be granted through two types of programs: non-performance-based stock remuneration and performance-based stock remuneration. The timing of share grants to Executives will, in principle, be at a fixed time each year for non-performance-based stock remuneration, and for performance-based stock remuneration, at a specific time following the conclusion of the performance evaluation period. (The initial performance evaluation period will be the five fiscal years from the fiscal year ending March 31, 2027 to the fiscal year ending March 31, 2031; each performance evaluation period shall correspond to the period covered by the Company's medium-term management plan or other similar plans established by the Company. The same shall apply hereinafter.)
In addition, for both non-performance-based stock remuneration and performance-based stock remuneration, the timing of payment to Executives of an amount equivalent to the market value of the Company's shares shall, in principle, be upon their retirement. If Executives receive a grant of Company stock during their tenure, Executives shall, prior to receiving the grant, enter into a restricted transfer agreement with the Company as described in Section 3 below. Consequently, the disposal, through transfer and other means, of the Company's shares received by Executives during their tenure will be restricted until they step down from their positions.
Reference: Structure of the System (1) Establishment of the Rules on Stock
Remuneration for Executives
Acquisition of the right to receive shares
Conclusion of a restricted
[Entrustor]
The Company
transfer agreement
Granting of points
Executives
Trust administrator
(6) Non-exercise of voting rights
Contribution of funds
to the Trust Instruction to
abstain from
Stock aquisiiton
[Trustee]
Mizuho Trust & Banking
(Re-trustee: Custody Bank of Japan)
The Company's shares
exercising voting rights
(7) Grant of the Company Shares & Cash
[Beneficiaries]
Executives who meet beneficiary requirements
The Company will establish the Rules on Stock Remuneration for Executives within the scope of the framework approved in connection with this Proposal.
The Company will contribute funds to the Trust within the scope approved in connection with this Proposal.
The Trust will acquire the Company's shares using the funds entrusted in (2), either through transactions on the stock exchange or by accepting the disposal of the Company's treasury shares.
Executives will enter into a restricted transfer agreement with the Company, which provides that the Company's shares granted to them during their term of office shall be subject to restrictions on transfer and other dispositions until their resignation or retirement, and that the agreement shall include provisions such as clauses allowing the Company to acquire such shares without compensation under certain conditions.
The Company will grant points to Executives in accordance with the Rules on Stock Remuneration for Executives.
In accordance with the instructions of an independent trust administrator, the Trust shall not exercise voting rights attached to the Company's shares held in the Trust account.
The Trust shall grant shares of the Company to Executives who meet the beneficiary requirements set forth in the Rules on Stock Remuneration for Executives at a specified time each year and at a specified time following the end of the performance evaluation period ("Beneficiaries"), in an amount corresponding to the number of points granted to such Beneficiaries. However, if Executives meet the requirements set forth in the Rules on Stock Remuneration for Executives, a certain percentage of their points will be paid out in cash equivalent to the market value of the Company's stock upon their retirement.
Persons eligible under the System
Directors (outside and part-time directors are not eligible under the System) and executive officers
Trust period
From August 2026 (scheduled) until the Trust ends (there is no specific termination date for the period of the Trust; it will continue for as long as the System remains in effect. The System will terminate upon the delisting of the Company's shares, the repeal of the Rules on Stock Remuneration for Executives, or other similar events).
Trust amount
Subject to approval of this proposal, the Company will implement the System for the initial performance evaluation period (the "Initial Target Period"; the Initial Target Period and any performance evaluation periods commencing after the expiration of the Initial Target Period shall each be referred to as a "Target Period") and each subsequent Target Period. To provide Company Shares and Cash to Executives, the Company will contribute the following funds to the Trust as the source of funds for the Trust's acquisition of the Company's stock.
First, upon establishing the Trust (scheduled for August 2026), the Company will contribute to the Trust a portion of the funds estimated to be necessary for the Initial Target Period (five fiscal years). The maximum number of points to be granted to Executives under the System (each point being equivalent to one share of the Company's common stock) is 350,000 points per fiscal year, as described in (6) below. Therefore, at the time of establishing the Trust, the Company will contribute to the Trust a portion of the funds reasonably expected to be necessary to acquire up to 1.75 million shares, taking into account the closing price of the Company's common stock in regular trading on the Tokyo Stock Exchange immediately prior to that time. For reference, if a closing price of 2,906 yen as of May 11, 2026 is applied, the total amount of funds required for the Initial Target Period would be approximately 5,085 million yen (approximately1,017 million yen per year).
Furthermore, even after the Initial Target Period has expired, until the System ends, the Company will, in principle, reasonably estimate the number of shares required to make payments to Executives under the System for each Target Period, and will make additional contributions to the Trust in an amount deemed necessary for the Trust to acquire such shares in advance. However, if such additional contributions are made, and there are any remaining shares of the Company (excluding shares of the Company corresponding to the number of points granted to Executives for each Target Period up to the immediately preceding period, for which benefits to such Executives have not yet been paid) and cash ("Remaining Shares and Cash") within the Trust property, the Remaining Shares and Cash shall be allocated as the source of funds for benefits under the System during subsequent Target Periods, and the amount of the additional contribution shall be calculated after taking the Remaining Shares and Cash into account. The Company may make contributions to the Trust in multiple installments during the Target Period. Should the Company decide to make additional contributions, it will disclose such information in a timely and appropriate manner.
Note: The amount of funds that the Company will actually contribute to the Trust consists of the funds for the acquisition of the shares mentioned above, plus the estimated amount of necessary expenses such as trust fees.
Method and number of Company shares to be acquired by the Trust
The acquisition of the Company's shares by the Trust shall be carried out using the funds contributed pursuant to (4) above, either through the stock exchange or by subscribing to the Company's disposal of treasury shares.
As the maximum number of points that may be granted to Executives is 350,000 points per fiscal year, as set forth in (6) below, the maximum number of shares of the Company's stock that the Trust may acquire for each Target Period shall be the number of fiscal years comprising the Target Period multiplied by 350,000 shares (provided, however, that following the approval of this proposal, in the event of a stock split, a bonus allotment, or a reverse stock split, etc., the conversion ratio shall be reasonably adjusted in accordance with such ratios.) Details regarding the acquisition of the Company's shares by the Trust will be disclosed in a timely and appropriate manner.
Maximum number of Company Shares and Cash granted to Executives
With regard to non-performance-based stock remuneration, Executives are awarded a number of points for each fiscal year, determined according to their position in accordance with the Rules on Stock Remuneration for Executives. In addition, regarding performance-based stock remuneration, Executives are awarded a certain number of points for the performance evaluation period, determined in accordance with the Rules on Stock Remuneration for Executives based on factors such as their position and the degree to which performance targets were met. The total number of points awarded to directors per fiscal year shall not exceed 250,000 points for directors (excluding outside and part-time directors), and 350,000 points for all Executives. This decision was made after comprehensively considering the current level of executive remuneration, trends in the number of directors, and future projections, and we believe it is appropriate.
Points granted to Executives will be converted at a rate of one point per one share of the Company's common stock upon the grant of Company Shares and Cash, as described in (7) below (provided, however, that if, after the approval of this proposal, a stock split, a bonus allotment, or a reverse stock split, etc., is conducted with respect to the Company's stock, reasonable adjustments shall be made to the maximum number of points, the number of points already granted, or the conversion ratio in accordance with the applicable ratios, etc.).
In addition, the number of voting rights associated with the shares corresponding to the maximum number of points granted per fiscal year to directors (excluding outside and part-time directors)-2,500 voting rights-represents approximately 0.086% of the total number of voting rights associated with the total number of issued shares, which is 2,902,012 voting rights (as of March 1, 2026).
The number of points for Executives that serves as the basis for the grant of Company Shares and Cash, described in (7) below shall, in principle, be the number of points granted to such Executives by the time the benefit rights described in (7) below are vested (hereinafter, the points calculated in this manner shall be referred to as "vested points").
Grant of Company Shares and Cash
Executives who meet the beneficiary requirements will, upon completing the prescribed beneficiary determination procedures, receive a grant of Company stock from the Trust at specific times each year and at a specific time following the end of the performance evaluation period, in an amount corresponding to the vested points established in accordance with the provisions set forth in (6) above. However, if the conditions