Executive Remuneration

Policy for Determining Remuneration for Directors（excluding Directors who are Audit and Supervisory Committee Members）

Sumitomo Pharma has established the Nomination and Compensation Committee to enhance the objectivity and independence of the functions of the Board of Directors with respect to the nomination of candidates for Directors and the determination of remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members). In April 2026, the Company reviewed the role of the Committee, expanding its functions from solely serving as a consultative body to the Board of Directors to serving either as a consultative body or as a decision-making body delegated by the Board of Directors. In addition, effective April 1, 2026, the Company revised the policy for determining individual remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members) in conjunction with the revision of the Director remuneration system, as set out below. This revision was resolved by the Board of Directors on March 30, 2026, taking into account the recommendation of the Nomination and Compensation Committee.

System of Remuneration

Remuneration for the Directors (excluding Outside Directors and Non-Executive Directors) consists of the following components:

• Base remuneration
• Performance-linked remuneration (bonuses)
• Long-term incentives (remuneration for the acquisition of the Company’s shares)

These remuneration components are established to serve as an incentive for achieving sustainable growth and enhancing the corporate value of the Group.

　　

The long-term incentives (remuneration for acquisition of the Company’s shares) are the remuneration to be contributed to the Sumitomo Pharma Officers Shareholders' Association for the purpose of acquiring shares of the Company. The shares acquired are required to be continuously held during the Directors’ term of office and for one year after their retirement. Through such measures, the Directors' willingness to contribute to the increase of corporate value in the medium- to long-term is enhanced and value sharing with shareholders is promoted.

　　

Remuneration for the Outside Directors and Non-Executive Directors consists of base remuneration only, and the Company adopts a remuneration system where the business performance of the Company is not linked thereto, for the purpose of securing the supervisory function and independence of the Outside Directors.

　　

The base amounts are set for the base remuneration, performance-linked remuneration (bonuses) and long-term incentives (remuneration for the acquisition of the Company’s shares) according to each position, such as Representative Director. The ratios of the base remuneration, performance-linked remuneration (bonuses), and long-term incentives (remuneration for the acquisition of the Company’s shares) of the Directors (excluding Outside Directors and Non-Executive Directors) are set to be approximately 60% for the base remuneration and 30% for the performance-linked remuneration (bonuses) and 10% for the long-term incentives (remuneration for acquisition of the Company’s shares), with respect to the total amount of the remuneration. The total amount of the remuneration shall be not more than 500 million JPY annually as approved at the Shareholders' Meeting.

Method of Calculating the Amount of Performance-Linked Remuneration (Bonuses)

The amount of the performance-linked remuneration (bonuses) for the Directors (excluding Outside Directors and Non-Executive Directors) is calculated based on the performance-linked elements and is set within the scope of zero to 200% of the base amount.

The following elements are adopted as the performance-linked elements：

• "Core operating profit," which is set as a profit indicator showing recurring profitability of a company within the Group and serves as an original performance management indicator
• "R&D results," which are the base of the business activities of the Group and important to its continuous growth
• "Operating cash flow," which serves as the investment fund for R&D and related activities.

The Nomination and Compensation Committee evaluates these performance-linked elements based on the degree of achievement of performance targets. Regardless of the result of the calculation, the performance-linked remuneration (bonuses) will not be paid if no dividend is paid throughout the relevant business year.

Method of Determining Remuneration

Remuneration for individual Directors is to be determined by the Nomination and Compensation Committee, to which the Board of Directors delegates the authority to make such decisions, based on the system of remuneration for Directors.

Remuneration of Directors who are Audit and Supervisory Committee Members

Directors who are Audit and Supervisory Committee Members receive only base remuneration. The details of individual remuneration are determined through consultation among the Directors who are Audit and Supervisory Committee Members, within the annual limit of 100 million JPY as approved at the 205th Annual General Meeting of Shareholders held on June 26, 2025.

Amount of Executive Remuneration (Fiscal 2025)

The remuneration for fiscal 2025 has been calculated in accordance with the previous remuneration system for Directors *1. With respect to the remuneration, Toru Kimura, Representative Director, President and CEO, who oversees the overall operations and is fully informed of the execution of duties by all Directors (excluding Outside Directors), determines under delegation from the Board of Directors. The Nomination and Compensation Committee confirms that such details are in accordance with the system of remuneration for Directors. Based on the above, the Board of Directors has determined that the remuneration is consistent with the Company's Policy on Director Remuneration.

Amount of Executive Remuneration (Fiscal 2025)

• （注） 1.  The amount paid for Audit & Supervisory Board Members is for the period before the Company’s transition to a company with the Audit and Supervisory Committee, and the amount paid for Directors who are Audit and Supervisory Committee Members is for the period after the transition.
  2. The amount of remuneration and the like for Directors (excluding Directors who are Audit and Supervisory Committee Members) that was determined by resolution at the 205th Annual Shareholders’ Meeting held on June 26, 2025, does not exceed 500 million JPY annually, and the number of Directors concerned under this resolution was six (6).
  3. The amount of remuneration and the like for Audit & Supervisory Board Members that was determined by resolution at the 185th Annual Shareholders’ Meeting held on June 29, 2005, does not exceed 100 million JPY annually, and the number of Audit & Supervisory Board Members concerned under this resolution was four (4).
  4. The amount of remuneration and the like for Directors who are Audit and Supervisory Committee Members that was determined by resolution at the 205th Annual Shareholders’ Meeting held on June 26, 2025, does not exceed 100 million JPY annually, and the number of Directors concerned under this resolution was four (4).
  5.  The Directors (excluding Directors who are Audit and Supervisory Committee Members) include two (2) Outside Directors who retired upon the conclusion of the 205th Annual Shareholders’ Meeting held on June 26, 2025.
  6. As for base remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors), in light of a challenging business situation, reduction was made from April 2025 to June 2025, by 30% for the Representative Director, President and CEO, and by 20% for other Directors. From July 2025 to March 2026, reduction was made by 10% for the Representative Director, President and CEO. From April 2026 to June 2026, reduction will be made by 10% for the Representative Director, President and CEO.