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Interview with an Outside Director

I will contribute to enhancing the corporate governance, to fostering the continuous creation of innovation and to strengthening human resources and organizational capabilities. Etsuko Okajima Outside Director President and Representative Director, ProNova Inc. Professor, Graduate School of Management, GLOBIS University Ms. Okajima works as a consultant specializing in enhancement of management teams. Leveraging her extensive experience in corporate management, she has served as an outside Director of Astellas since 2014.

Q: In your view, what roles should you fulfill as an outside Director to improve enterprise value and how are you making a contribution?

A: I strive to supervise business execution from an objective viewpoint by taking full advantage of my expertise in human resource development.

At Astellas, all outside Directors are expected to contribute as professionals from objective points of view. I am engaged in developing the next generation of management teams with my expertise in strategic human resource development as the president of a human resource consulting firm. Thus, I am committed to making a significant contribution especially to discussions on succession planning in the Nomination Committee, and to the supervision of personnel assignments and human resource development to create innovation.

In my daily discussions as an outside Director, I recognize that the Companyfs management should reflect objective perspectives, such as whether anything has been overlooked internally and what will be the impartial judgements. Notably, in terms of increasing enterprise value by creating innovation, it is crucial to evaluate risks and to supervise whether necessary risks are appropriately taken in resource allocation.

It tends to be difficult to judge the extent of the risks that a company should take from the standpoint of outside Directors. In this respect, Astellas has a system that enables the outside Directors to monitor the situation by providing information to them on projects in consideration which are in the stage prior to being shared at Board of Directors meetings. In addition, I believe that the briefings given by the executives are vital to judging risk. For example, in discussions on M&As, President and CEO Hatanaka and other executives provide briefings in their own words on the reasons for implementing the project, the determination of management and their perspectives on risk, including the background of the project. Through this explanation and sound discussion over sufficient periods of time, we, outside Directors, deepen our understanding and awareness of the Companyfs tolerance of risk and how positively management is willing to assume the risk. To date, we have communicated and discussed with Astellasf management team so that we can confidently place fundamental trust in their management philosophy and their risk-taking capacity. In the course of examining each proposal, we are able to reconfirm the thinking of the management team to provide our perspective. Through this process, we strive to maximize our supervisory roles as outside Directors.

Q: What are the initiatives at Astellas which are designed to enhance the effectiveness of the Board of Directors?

A: Astellas continues to drive the evolution of the composition and operation of the Board of Directors, and the outside Directors are well-informed.

I have had the opportunity to examine many different companies. I believe that Astellasf Board of Directors clearly stands out in terms of ensuring reliable management to create innovation. My belief is based on two main reasons.

The first reason is that Astellas continues to drive evolution in the composition and operation of the Board of Directors, in order to reach its clearly stated goal of realizing its business philosophy. Astellasf management team has extensively looked at how the Board of Directors should be structured and operated to create innovation, including delegating authority to executives, and has reflected this resolve in the ways of working and management of the Board of Directors. For example, outside Directors have been the majority of the Board of Directors for many years and one or two of them are replaced every year. I believe that this approach helps to bring diverse and ongoing innovation through disciplined member turnover, in conjunction with maintaining the quality of discussions amongst the Board of Directors.

The second reason is that Astellas has enhanced the information it provides to the outside Directors. Astellas properly provides the information needed by all board members to discuss matters using the same wording and concepts shared in meetings of the Board of Directors. I believe that this helps to enhance the effectiveness of the monitoring of business execution, besides increasing the quality of discussions as a matter of course. Twice a year, Astellas holds Board of Directors meetings at various business sites other than the Headquarters Office including locations outside of Japan. This provides a valuable opportunity to directly obtain real information related to my field of specialty regarding issues such as the capabilities and situations of local employees and the relationship between management and local employees. I feel that this opportunity is very helpful in the course of fulfilling my duties as an outside Director.

Q: Could you discuss the features of succession planning at Astellas and your assessment of this process?

A: Astellas is strategically developing people from an early stage who have been fairly selected.

Astellas is strategically developing the next generation of business leaders. It also emphasizes fairness in the selection and development of those candidates. Based on these two points, I value the leading system of Astellasf succession planning.

In preparation for various environmental changes both within and outside the Company, Astellas identifies and captures high-potential employees who are candidates for the next generation of management well in advance. It then strategically assigns and transfers these personnel within the organization. Over the past few years, I have advised that this type of human resource development must begin at an early stage of peoplefs careers, and I feel that this discussion is ongoing now. Astellas intentionally assigns high-potential human resources to positions of responsibility from an early stage in their careers and gives them the opportunity to gain experience under pressure. I refer to this process as gpushing people beyond their comfort zone.h Through these assignments and appointments, Astellas develops human resources. Astellas also emphasizes the fair selection of candidates, looking at multiple factors beyond tenure to find the best fit for the job. From my perspective as a human resource specialist, Astellas is following a reliable process.

I believe that the importance of ensuring fairness in human resource development will only continue to further increase. In recent years, Astellas has proactively executed M&A deals. In order to attract talented human resources, including members who have joined the Group through M&A activity, and to harness their talent, it is critical for Astellas to treat all personnel fairly without any bias with respect to age or company background. I have been able to share this recognition with the management team, and I feel that we have held good discussions in both meetings of the Board of Directors and the Nomination Committee.

Q: Could you discuss your expectations for Astellas as an outside Director?

A: I expect Astellas to further develop gdynamich systems in order to create innovation.

Astellas needs to continue creating innovation to meet the expectations of its stakeholders, and this is my expectation as well.

From the viewpoint of organizational development, which lies in my field of expertise, creating innovation requires implementation of diversified perspectives in making decisions and newly connecting factors which are as different as possible. To do that, it is crucial to incorporate gdynamich systems into the organization. Astellas is already implementing these approaches to develop gdynamich systems, i.e., taking steps to ensure that innovation is not hindered by a fixed organizational structure or by the impediments of sectionalism/narrow viewpoints. As I said before, Astellas regards personnel assignment as an important pillar of human resource development, and encourages strategic and proactive personnel transfers. In addition, Astellas has made various efforts to avoid fixed organizations through such means as promoting flexible collaboration with external partners and cross-functional collaboration. I expect these measures to contribute immensely to creating innovation.

I believe the agenda for the future is to develop more gdynamich systems in the Board of Directors. One specific example would be to further increase the diversity of the members of the Board of Directors, including the appointment of foreign nationals to the board.

I am determined to trigger gdynamich evolution through my comments in the Board of Directors discussions and in the Nomination Committee meetings. By doing so, I intend to continue contributing to the enhancement of corporate governance at Astellas.

TOPICCorporate Governance of the Year 2016 Award

Astellas Selected as one of the 2016 Prize Winners

Astellas has been selected as one of the winners in the Corporate Governance of the Year Awards for 2016 organized by the Japan Association of Corporate Directors.
Corporate Governance of the Year Awards are held to recognize companies that are achieving sound medium- to long-term growth by implementing good corporate governance. Considering that one year has passed since the Corporate Governance Code entered force, the nomination process emphasized not only formal structures, but also the actual implementation of corporate governance systems.
A member of the Nomination Committee for the awards commended Astellasf corporate governance, noting that the Company has firmly instilled corporate governance in management and has a well-developed corporate governance system in place that facilitates prompt decision-making.
Without becoming complacent with the status quo, Astellas will continue to strengthen corporate governance so that it can continue to improve its enterprise value.

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