Shionogi & Co., Ltd.

Shionogi to Introduce Stock Options as Compensation (Stock Acquisition Rights) to Members of Board of Directors

Osaka, Japan, May 9, 2011 - Shionogi & Co., Ltd. (Head Office: Osaka; President & CEO: Isao Teshirogi, Ph.D.; hereafter “Shionogi” or “the Company”) today announced that the Board of Directors of the Company has decided to propose a resolution introducing a stock option scheme (stock acquisition rights) as compensation to members of the Board of Directors other than its Outside Directors of the Company (hereafter the “Qualified Directors”), at the 146th Annual General Meeting of Shareholders scheduled on June 24th, 2011. The proposal is detailed below.

1. The reason for introducing stock options (stock acquisition rights) Shionogi proposes to offer stock options (stock acquisition rights) to the Qualified Directors in order to better align their incentives with mid and long term corporate performance, including corporate stock value, by sharing not only the merits but also the risks of changes in share price with our shareholders.

2. The details of the resolution to introduce stock options as compensation Shionogi is seeking approval at the 146th Annual General Meeting of Shareholders to permit the issuance of stock options (stock acquisition rights) as remuneration to the Qualified Directors of the Company. The principal terms of the stock acquisition rights are as follows.
(1) Total number of the stock acquisition rights, and class and number of shares to be issued upon exercise of stock acquisition rights
1) Total number of the stock acquisition rights The maximum number of stock acquisition rights is 750, which will be allotted amongst the Qualified Directors within a year from the day of the Annual General Meeting of Shareholders for the corresponding fiscal year.
2) Class and number of shares to be issued upon exercise of stock acquisition rights The class of shares to be issued upon exercise of stock acquisition rights will be shares of common stock of Shionogi. The number of shares to be issued upon exercise of each of the 750 stock acquisition rights will be 100 shares, for a maximum total allotment amongst the Qualified Directors of 75,000 shares of common stock (hereafter the “Number of Allotted Shares”).
In case of the Company conducts a stock split (including free allotment of common stocks) or a consolidation of common stocks of the Company, after the date of the allocation of stock acquisition rights (hereafter the “Allotment Date”), the Number of Allotted Shares will be adjusted according to the formula below, regarding non-exercised stock acquisition rights as of the date when the stock split or stock consolidation is conducted.
Number of Allotted Shares after adjustment = Number of Allotted Shares before adjustment × Ratio of stock split or stock consolidation
In addition, in the case that the Company is subject to a merger, a company split or a share exchange after the Allotment Date, or if there is another instance in which the adjustment of the Number of Allotted Shares is appropriate, the Company shall reasonably adjust it to the extent possible, based on the resolutions of the Board of Directors of the Company. Any fractional share (less than one) resulting from the adjustment mentioned above shall be rounded down.

(2) Amount of assets to be paid upon the exercise of stock acquisition rights
The amount of assets to be paid upon exercise of stock acquisition rights shall be determined by multiplying the per-share value by the number of allotted shares, where the value per share to be issued or transferred upon exercise of the stock acquisition rights shall be one Japanese yen.

(3) Exercise period for stock acquisition rights
Within 30 years of the day following the Allotment Date.

(4) Restrictions on transfer of stock acquisition rights
Any proposed transfer of stock acquisition rights shall be subject to the approval of the Board of Directors of the Company.

(5) Conditions for the exercise of stock acquisition rights
A person who has been granted stock acquisition rights, but who ceases to be a Qualified Director before the expiration of the exercise period in (3) above, may exercise all such rights, in a single transaction, within ten days (in the event that the 10th day is a holiday, by the next business day) of the day immediately following the day upon which he/she ceases to be a Qualified Director.

(6) Other details of the stock acquisition rights
Other matters related to the stock acquisition rights shall be determined by the Board of Directors of the Company.

Note;
In addition, the Company plans to allot similar stock options as compensation (stock acquisition rights) to Corporate Officers following resolutions to be taken by the Board of Directors of the Company after the 146th Annual General Meeting of Shareholders scheduled in this June, if the above proposal is approved at the General Meeting.

Forward-Looking Statements
This announcement contains forward-looking statements. These statements are based on expectations in light of the information currently available, assumptions that are subject to risks and uncertainties which could cause actual results to differ materially from these statements. Risks and uncertainties include general domestic and international economic conditions such as general industry and market conditions, and changes of interest rate and currency exchange rate. These risks and uncertainties particularly apply with respect to product-related forward-looking statements. Product risks and uncertainties include, but are not limited to, completion and discontinuation of clinical trials; obtaining regulatory approvals; claims and concerns about product safety and efficacy; technological advances; adverse outcome of important litigation; domestic and foreign healthcare reforms and changes of laws and regulations. Also for existing products, there are manufacturing and marketing risks, which include, but are not limited to, inability to build production capacity to meet demand, unavailability of raw materials and entry of competitive products. The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

For further information, contact:
Corporate Communications Department
Shionogi & Co., Ltd.
Telephone: +81-6-6209-7885
Fax:
+81-6-6229-9596