Chugai has designed its remuneration plan for directors and Audit & Supervisory Board members to attract outstanding people and appropriately motivate them in order to continuously increase the Chugai Group’s corporate value.

In order to further clarify the link between remuneration and the Company’s business performance and shareholder value, and to raise directors’ ambition and motivate them to improve performance, executive director remuneration consists of fixed regular compensation, bonuses paid according to performance and other factors in each fiscal year as a short-term incentive, and restricted stock compensation linked to medium- and long-term performance (tenure-based and performance-based) as a long-term incentive. The guidelines for remuneration composition by type are as follows: CEO remuneration consists of 35% regular compensation, 30% bonuses, and 35% restricted stock compensation; remuneration for other executive directors is determined in consideration of duties and other factors.

Bonuses are determined by multiplying the standard amount set for each position by an evaluation coefficient reflecting an overall assessment based on Company and individual performance set with reference to the published forecasts for the relevant fiscal year. For restricted stock compensation, 50 % is tenure-based restricted stock with a transfer restriction period of three to five years, and 50% is performance-based restricted stock.

Remuneration of non-executive directors, including outside directors, and Audit & Supervisory Board members consists solely of fixed regular compensation.

Individual remuneration is determined by the following process within the scope of the total amount decided by the General Meeting of Shareholders.

• Executive directors: determined by the Board of Directors after deliberation by the Compensation Committee
• Non-executive directors (including outside directors): decided by the CEO having been designated by the Board of Directors, based on the advice of the Compensation Committee
• Audit & Supervisory Board members: decided through discussion by the Audit & Supervisory Board members

Furthermore, so that the relevant deliberations take place with expert input on officer remuneration systems and with due consideration of other factors, including the wider changes affecting corporate executive remuneration, the Compensation Committee—which is appointed by the Board of Directors and consists of three or more external members, at least one of whom is an independent outside director—bases its discussion on the results of a survey by an external expert organization, thus ensuring the transparency and objectivity of the decision-making process so that it can uphold accountability to stakeholders.

System for Remuneration of Directors and Audit & Supervisory Board Members

Criteria for Performance-Based Remuneration and the Method to Determine Its Amount

Amount of Remuneration Paid to Directors and Audit & Supervisory Board Members (2023)

• 1. Amounts are rounded to the nearest million yen.
• 2. The above includes two directors and two Audit & Supervisory Board members who retired during the fiscal year under review.
• 3. The above bonus amount is the actual amount of executive bonuses for the fiscal year under review.
• 4. The amounts of restricted stock compensation (tenure-based and performance-based) shown in the table above are the amounts recorded as expenses for the fiscal year under review as each respective restricted stock compensation.

Amount of Remuneration Paid to Representative Directors (2023)

• 1. Amounts are rounded to the nearest million yen.
• 2. Figures show the total amount of remuneration, etc., for representative directors.
• 3. Other than the representative directors in the table above, no director or Audit & Supervisory Board member received total remuneration of more than ¥100 million.