Coca Cola Bottlers Japan : Notice on changing of Long-term incentive (Stock-based compensation)

February 9, 2023

Company	Coca-Cola Bottlers Japan Holdings Inc.
Representative	Representative Director &		Calin Dragan
President
	(Code 2579 TSE Prime Market)
Contact	Executive Officer,		Maki Kado
Executive Business Manager
		Tel. [phone]

Notice on changing of Long-term incentive (Stock-based compensation)

At the Board of directors meeting held on February 9, 2023, the Company resolved to introduce "Executive reward BIP Trust" (hereinafter referred to as "BIP Trust" (*1) ) as a new Long-term incentive (Stock-based compensation) plan (hereinafter referred to as "the Plan") to replace the existing Long-term incentives (Stock-based compensation) plan (hereinafter referred to as "the Former stock-based compensation plan") approved at the Ordinary general meeting of shareholders for FY2020 held on March 25, 2021 for the Company's directors of the Company (excluding Directors who are Audit and supervisory committee members and Outside directors, hereinafter referred to as "Executive directors").

Compensation for the Company's Executive directors consists of base salary, annual bonus, reserved retirement payment, Long-term incentives (Stock-based compensation) (Performance Share Unit plan (hereinafter referred to as the "PSU") and Restrictive Stock Unit plan (hereinafter referred to as the "RSU"). This resolution changes the content of "Long-term incentives (Stock-based compensation)" to use BIP Trust.

As a result, the Company will submit to the Company's Ordinary general meeting of shareholders for FY2022 (hereinafter referred to as the "General meeting of shareholders") scheduled to be held on March 28, 2023. We would like to inform you as follows. The specific performance-linked mechanism of this system has been established by inheriting the contents of the Former stock-based compensation plan and is described in "3. Ⅰ . (1) Outline of BIP Trust" and below.

The Company also plans to introduce a Stock-granting ESOP Trust (*2) for the Company's Executive officers, employees recognized by the Company, and Executive officers and employees of Group subsidiaries designated by the Company and will announce the timing of the introduction and the details of the total amount of shares to be acquired as soon as they are decided.

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1. Abolition of the Former stock-based compensation plan

The Company will abolish the Former stock-based compensation plan subject to approval of the BIP Trust proposal at the General meeting of shareholders. Subject to the commencement of the Plan, points equivalent to the standard amount calculated under the Former stock-based compensation plan or the number of common shares scheduled to be vested will be granted under the Plan as a transitional measure from the Former stock-based compensation plan, and shares will be vested from the Plan.

2. Purpose of introducing the Plan, etc.

1. The Company will introduce the Plan with aiming to increase the motivation of Executive directors subject to the Plan to contribute to the medium- to long-term improvement of corporate value and the rise in stock prices of Group companies, to strengthen the competitiveness of acquisition and retention of talent rich in diversity from the perspectives of nationality and experience, and to further enhance incentives for sharing profit awareness with shareholders and improving corporate value.
2. The Plan vests the Company shares acquired under the Plan and money equivalent to the exchange price of the Company's shares (hereinafter referred to as "Company shares, etc."). (hereinafter referred to as "Vesting, etc.") to Executive directors).
3. The introduction of a BIP Trust is subject to the approval of officer remuneration at the General meeting of shareholders.
   *1 BIP (Board Incentive Plan) Trust is an incentive plan for executives based on the Performance Share and Restricted Stock plans in the United States.
   *2 ESOP (Employee Stock Ownership Plan) Trust is an incentive plan for employees based on the ESOP system in the United States.

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3. Outline of the Plan

I. Structure of BIP Trust

① Resolution of this General meeting of shareholders

⑧Transfer and		【Consignor】
cancellation of		the Company
remaining
shares without ⑤Dividends	④Company ③Establish trust
charge	④Payment

⑨ Provision of	shares
residual assets
【Trustee（joint trusteeship）】
	④Company
	shares	（scheduled）
Stock
		Mitsubishi UFJ Trust and Banking
			⑦ Vesting of the
market
④Payment	Corporation
	Company
			The Master Trust Bank of Japan, Ltd.
			shares, etc.
			BIP Trust

②Establish Stock-based

compensation

【Beneficiary】

Person subject to the plan

Trust administrator

⑥Instructions for non-exercise of voting rights

1. The Company will obtain approval for the introduction of the BIP Trust at this General meeting of shareholders.
2. The Company shall establish Stock-based compensation regulations concerning the contents of the BIP Trust at the Board of directors meeting.
3. The Company will establish a BIP Trust in which the money that will be the source of the Company's Stock-based compensation will be entrusted to a trustee and the Executive directors who satisfy the requirements for beneficiaries ("the Eligible directors") will be the beneficiaries. The amount of money that the Company may contribute shall be limited to the amount approved by the General Meeting of Shareholders in 1) above.
4. The BIP Trust acquires the Company's shares from the stock market or the Company (Treasury stock) using the money contributed in 3) above as the source of funds in accordance with the instructions of the Trust administrator. The number of shares to be acquired by the BIP Trust shall be within the range approved by the General meeting of shareholders in 1) above.
5. Dividends will be paid to the Company's shares in the BIP Trust in the same manner as other Company shares.

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1. Voting rights shall not be exercised with respect to the Company's shares in the BIP Trust throughout the trust period.
2. As a transitional measure from the Former stock-based compensation plan, without delay after the establishment of the BIP Trust, Executive directors who were subject to the Former stock-based compensation plan will be granted points equivalent to the base amount calculated under the Former stock-based compensation plan or the number of the Company's common shares to be granted.
   During the trust period, a certain number of points will be granted to the Eligible directors according to their responsibilities and the degree to which they have achieved performance targets.
   To the Eligible directors who meet certain beneficiary requirements, as described in (8) below, the number of shares of the Company's stock, etc. corresponding to the number of points will be vested after the end of the applicable period and at the time of retirement.
   As described in (8) below, as a rule, the Company shares equivalent to a certain percentage of such points (rounded up to the nearest unit) will be vested, and the remainder will be converted into cash within the BIP Trust and paid out in an amount equivalent to the amount of the conversion price.
3. In the event that residual shares remain at the end of the trust period due to failure to achieve the Company's performance targets, etc., the BIP Trust will either continue to be used as a new Stock-based compensation plan by amending the Trust agreement and implementing an additional trust, or the BIP Trust will transfer such residual shares to the Company without compensation and cancel them by a resolution of the Board of directors.
4. The remainder of the dividends on the Company's shares in the BIP Trust that arise at the expiration of the trust period will be used to fund the acquisition of shares if the BIP Trust is used continuously, but if the BIP Trust is terminated due to expiration of the trust period, it will be donated to an organization that has no interest in the Company or the Eligible directors.

(Note) During the trust period, if the number of shares in the BIP Trust may fall short of the number of shares corresponding to the number of points (set forth in (5) below) to be determined for the Eligible directors, or if the money in the trust assets may fall short of the payment of trust fees and expenses, additional money may be placed in the BIP Trust within the maximum amount of trust money set forth in (6) below.

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(1) Overview of BIP Trust

The BIP Trust covers three consecutive business years (hereinafter referred to as the "applicable period". The initial target period is three fiscal years, from the fiscal year ending December 31, 2023 to the fiscal year ending December 31, 2025. After the fiscal year ending on December 31, 2023, the Company plans to continue to cover three consecutive fiscal years at the beginning of a new fiscal year.), In the first fiscal year where the target period begins, points equivalent to the standard amount by job responsibility will be granted to the Eligible directors. After the expiration of the target period or upon retirement of the Eligible director, the Company shall vest number of shares, etc. equivalent to the points granted.

Specifically, the Plan consists of "Performance Share Unit Plan (PSU)" and "Restricted Stock Unit Plan (RSU)". PSU: Points granted according to position, etc. in the first fiscal year when the target period begins will fluctuate according to the degree of achievement of Company performance during the target period. The Company's shares, etc. corresponding to the points shall be vested after the expiration of the target period. RSU: At the time of the retirement of the Eligible director, the Company shall vest the Company's shares, etc. in accordance with the points granted according to their position, etc. in the first fiscal year when the target period begins.

The main purpose of "Performance Share Unit Plan (PSU)" is to motivate the Eligible directors to improve corporate value over the medium to long term, and of "Restricted Stock Unit Plan (RSU)" is to share value with shareholders and to strengthen the retention of excellent talent.

(2) Resolutions of the General meeting of shareholders

The maximum amount of trust money to be contributed to the BIP Trust and the maximum total number of shares, etc. to be vested, etc. to the Eligible directors and other necessary matters shall be resolved at this General meeting of shareholders.

If the BIP Trust is to be continued as set forth in (4) below, the Board of directors, within the scope of the approval resolution of this General meeting of shareholders, shall decide to amend the Trust agreement and make additional contributions to the BIP Trust at the expiration of the trust period.

(3) Eligibility for BIP Trust (Beneficiary requirements)

Subject to fulfillment of the following requirements for beneficiaries, the Eligible directors may be vested from the BIP Trust the Company's shares, etc. equivalent to the number of points granted to them after completing the prescribed procedures for determining beneficiaries.

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