Officer Remuneration
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.
<Standard of Remuneration>
The Company aims to materialize a market competitive remuneration standard that enables to secure superior human resources and give appropriate motivation. The remuneration standard is determined for each fiscal year in reference to the remuneration benchmark of a group of companies comprising large corporations and pharmaceutical companies in Japan, based on the results of a survey conducted by an external specialist organization, after deliberation by the Compensation Committee in consideration of roles and duties, etc. of each Director.
<Structure of Remuneration>
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 trust-based stock compensation linked to medium- and long-term performance (tenure-based and performance-based) as a long-term incentive. The proportion of remuneration for CEO for a fiscal year is based on a guideline of “regular remuneration at 1, bonuses at 1 and stock compensation at 1.3”and the proportion of each remuneration for other Executive Directors is determined in consideration of their responsibilities, etc. Remuneration of non-executive directors, including outside directors, and Audit & Supervisory Board members consists solely of fixed regular compensation.
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.
At the 115th Annual General Meeting of Shareholders held on March 26, 2026, a resolution was passed to adopt a trust-based stock compensation system, replacing the previous restricted stock remuneration system. For trust-based stock compensation, which serves as a long-term incentive, the Company contributes funds equivalent to the remuneration amount for Executive Directors to a trust. Using these funds, the trust acquires Company shares, and the shares (including cash equivalents from the liquidation of shares) are then granted and paid as executive remuneration based on factors such as rank, responsibilities, and the degree of achievement of performance targets. The trust-based stock compensation system involves granting base points every fiscal year and then delivering, etc. the Company’s shares four fiscal years later. The evaluation indicators consist of performance-based linked to relative Total Shareholders Returns (TSR) and a non-performance-based (tenure-based) that is paid on the condition of a certain period of service with the aim of motivating Directors to increase the corporate value over the medium- to long-term and promoting retention. Directors will receive the base points at a rate of 30% tenure-based and 70% performance-based. The base points to be granted are calculated by dividing the base amount, which is determined according to position, responsibilities, etc., by the monthly average closing price of the Company’s shares in regular trading in March of the year in which this trust is established (or, if this trust is extended, the fiscal year in which the date of said extension falls). Under the tenure-based, subject to the condition on having served as a Director of the Company for four fiscal years, the share delivery points equal to the number of the base points will be determined, and under the performance-based, furthermore, the share delivery points will be determined within a range of 0% to 150% of the base points based on the comparison ranking of TSR between domestic pharmaceutical companies and the Company after four fiscal years from the grant (the evaluation period). Directors will be delivered with the number of Company’s shares equivalent to 50% of the share delivery points, and the remainder will be converted into cash within the trust, after which the Directors will be paid the amount equivalent to the converted value.
<Overview of the Process to Determine Officers’ Remuneration, etc.>
Individual remuneration is determined by the following process within the limit of the total remuneration amount resolved at 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
| Type of remuneration | Eligible officers | Payment criteria | Payment method | ||||
|---|---|---|---|---|---|---|---|
| Executive directors |
Non-executive directors (including outside directors) |
Audit & Supervisory Board members | |||||
| Fixed Regular Compensation | Regular compensation | ● | ● | ● | Paid according to position, duties, and other factors | Monthly (Cash) | |
| Performance-Based Remuneration | Bonuses | ● | — | — | Paid according to performance in each fiscal year | Yearly (Cash) | |
| Long-term incentive (Trust-based Stock compensation) | Tenure-based | ● | — | — | Paid according to fixed length of service | Four fiscal years later (Common stock, cash) | |
| Performance-based | ● | — | — | Paid according to performance over fixed period in addition to above | Four fiscal years later (Common stock, cash) | ||
Criteria for Performance-Based Remuneration and the Method to Determine Its Amount
| Type of Remuneration | Indicators and evaluation methods | |
|---|---|---|
| Bonuses |
|
|
| Trust-based Stock Compensation | Tenure-based |
|
| Performance-based |
|
|
- *1: Base points are calculated by dividing the base amount, which is determined according to position, responsibilities, etc., by the monthly average closing price of the Company’s shares in regular trading in March of the year in which this trust is established (or, if this trust is extended, the fiscal year in which the date of said extension falls).
- *2: Executive Directors will be delivered with the number of Company’s shares equivalent to 50% of the share delivery points, and the remainder will be converted into cash within the trust, after which the Directors will be paid the amount equivalent to the converted value.
Amount of Remuneration Paid to Directors and Audit & Supervisory Board Members (2025)
| Position | Total remuneration, etc. (Millions of yen) | Total amount by type of remuneration, etc. (Millions of yen) | Number of eligible officers | |||
|---|---|---|---|---|---|---|
| Regular compensation | Bonuses | Restricted stock compensation | ||||
| Tenure-based | Performance-based | |||||
| Directors (Excluding Outside Directors) | 585 | 201 | 179 | 106 | 99 | 4 |
| Outside Directors | 69 | 69 | — | — | — | 3 |
| Total | 654 | 449 | 205 | 7 | ||
| Audit & Supervisory Board Members (Excluding Outside Audit & Supervisory Board Members) | 78 | 78 | — | — | — | 3 |
| Outside Audit & Supervisory Board Members | 53 | 53 | — | — | — | 3 |
| Total | 131 | 131 | — | 6 | ||
- 1. Amounts are rounded to the nearest million yen.
- 2. The above includes a director and an Audit & Supervisory Board member who retired during the fiscal year under review.
- 3. The amounts of bonuses shown in the table above are the amount of provision for reserve for bonuses to directors 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 (2025)
| Name (Position) | Total consolidated remuneration, etc., by type (Millions of yen) | Consolidated remuneration total (Millions of yen) | |||
|---|---|---|---|---|---|
| Regular compensation | Bonuses | Restricted stock compensation | |||
| Tenure-based | Performance-based | ||||
| Dr. Osamu Okuda (Representative Director) |
137 | 135 | 85 | 84 | 441 |
- 1. Amounts are rounded to the nearest million yen.
- 2. Figures show the total amount of remuneration, etc., for representative directors.
- 3. The amounts of bonuses shown above are the amount of provision for reserve for bonuses to directors for the fiscal year under review.
- 4. Other than the representative directors in the table above, no director or Audit & Supervisory Board member received total remuneration of more than ¥100 million.