Corporate Governance

Board of Directors

SUMCO's Board of Directors comprises internal Directors with a proven record of performance in their respective areas of responsibility and outstanding management abilities, along with Outside Directors with expert knowledge and extensive experience, based on the basic stance of SUMCO to ensure an overall balance and diversity in knowledge, experience and capabilities of the Board of Directors. The Board of Directors comprises six Directors (excluding Directors who are Audit & Supervisory Committee Members) and seven Directors who are members of the Audit & Supervisory Committee (six of whom are Independent Outside Directors).

In accordance with legal statutes, the Articles of Incorporation and the Rules of the Board of Directors, the Board of Directors makes decisions on management strategy, management plans, and other such important matters relating to business. It receives reports from every Director on the status of the execution of duties and it exercises supervision of compliance, internal controls, risk management, and important business execution at affiliated companies. With the participation of Independent Outside Directors, the Board of Directors also engages in the free exchange of opinions regarding the appropriate evaluation of company performance and related matters, and reflects that evaluation in the personnel administration of senior management members.

It is also our basic company policy that matters relating to financial results and so on, matters relating to management plans, and the execution of other such important operations should be decided after adequate discussion by the Board of Directors, including the Independent Outside Directors. For this reason, the Articles of Incorporation do not stipulate that decisions on the execution of important business can be delegated to each Director.

The effectiveness of the Board of Directors is evaluated each year in order to continually enhance the effectiveness of corporate governance.

Assessment Process

1. An external agency conducted written surveys of all directors regarding the composition and operation of the board, management strategy and business strategy, risk management, nomination and compensation, and dialogue with shareholders and other stakeholders.
2. The survey results were reported to the Board of Directors, which, following an analysis and assessment of the overall effectiveness of the board, deliberated on issues that needed to be dealt with and how to address them.

Assessment Results in Fiscal 2025

1. Effectiveness of the Board of Directors
   The respondents felt that the effectiveness of the Board of Directors was largely ensured.
2. Response to issues identified in the previous fiscal year
   It was found that some progress had been made on raising the understanding of the business environment and other such matters by outside directors, an issue that was identified last year. Action taken included providing information at more appropriate junctures, implementing operational adjustments designed to foster exchanges of views, and holding open discussion sessions attended by all directors twice a year.
3. Issues identified this fiscal year
   The following two issues were identified.
   ① The need to enhance reporting of the Nomination and Compensation Committee’s activities to the Board of Directors
   ② The need to further enhance discussions of medium- to long-term management strategy.

Action to Be Taken on Issues Identified Based on This Year’s Assessment Results

1. Reporting of the Nomination and Compensation Committee’s activities to the Board of Directors will be enhanced.
2. Discussions of medium- to long-term management strategy will be further enhanced by making more extensive use and improving the quality of open discussion sessions attended by all directors.

In fiscal year 2025, the Board of Directors met 16 times to discuss important matters concerning management, address issues identified in the Board of Directors effectiveness evaluation conducted in the previous fiscal year, and discuss the remuneration policy and method for determining remuneration of Directors (excluding Outside Directors and Directors who are Members of the Audit & Supervisory Committee) and the amount of remuneration for individuals.

Directors

• Representative Director
• Independent Outside Director

Independent Outside Directors

SUMCO has appointed six Independent Outside Directors.; One is a person with wide experience and knowledge cultivated through experience in the public sector as well as many years of experience in corporate management; one is a person with expert knowledge and experiences in data science, etc., cultivated through experience in the public sector and education fields; one is a person with expert knowledge and experience related to the capital market, cultivated through experience in pension investment institutions and institutional investors; one is a person with expert knowledge and experience related to management analysis in the semiconductor and IT hardware industries, cultivated through her duties as a securities analyst; one is a certified public accountant with many years of experience in corporate management; and one is an attorney.

Each Outside Director satisfies SUMCO's "Criteria of Independence" established in accordance with Tokyo Stock Exchange standards on the independence of Independent Directors, and has been verified to be free of potential conflicts of interest with general shareholders.

In an effort to ensure the sustained growth of the SUMCO Group and increase its corporate value over the medium-to-long-term, the Independent Outside Directors provide advice on important matters related to management based on their own individual knowledge and take the perspective of minority shareholders and other stakeholders in supervising management. They participate in the appointment of candidates for Director and other important decision-making by the Board of Directors, and supervise business execution by the Board of Directors, senior management and others as well as conflicts of interest between SUMCO and senior management and others.

Audit and Supervisory Committee

SUMCO's Audit and Supervisory Committee is made up of seven Directors who are Audit and Supervisory Committee Members (six, a majority, of whom are Independent Outside Directors). In order to ensure the effectiveness of Audit and Supervisory Committee activities, permanent Audit and Supervisory Committee Members are put in place by resolution of Audit and Supervisory Committee. In addition, it is SUMCO's basic policy to take steps to ensure that at least one Audit and Supervisory Committee Member has considerable knowledge and experience pertaining to finance and accounting. Currently, this is Mr. Hyo Kambayashi, who is also a certified public accountant. Additionally, SUMCO has established the Audit and Supervisory Committee Office and assigns staff to support the activities of the Committee and facilitate the smooth performance of its audit and supervisory functions.

The Audit and Supervisory Committee exercises its statutory right of investigation and audits the Directors' execution of their duties from the viewpoints of appropriateness and conformance with laws and regulations and the Articles of Incorporation by inspecting and confirming the status of compliance with laws and regulations, Articles of Incorporation, and so on, and by monitoring and otherwise supervising the development of and operational status of the system of internal controls, including the internal control of financial reporting.

Nomination and Remuneration Committee

In an effort to further enhance its corporate governance, SUMCO has established a Nomination and Remuneration Committee composed of two Internal Director (Directors Jiro Ryuta and Mayuki Hashimoto) and three Independent Outside Directors (Directors Shinichiro Ota, Masahiko Sue and Amy Shigemi Hatta) to serve as a discretionary advisory body for the Board of Directors. The Nomination and Remuneration Committee receives requests from the Board of Directors for advice on the process for selection of candidate Directors and Executive Officers of SUMCO, their qualifications, the reasons for their designation, the structure of remuneration for Directors (excluding Directors who are Audit and Supervisory Committee Members) and Executive Officers, and related matters. The committee deliberates on the appropriateness and other aspects of the matter referred, including the perspectives of gender and other diversity as well as expert knowledge and experience, and, also taking evaluations of SUMCO’s performance into account, delivers its advice. The Board of Directors, receiving the findings of the Nomination and Remuneration Committee, designates candidate Directors and Executive Officers, and decides on the remuneration and other payments for Directors (excluding Directors who are Audit and Supervisory Committee Members).

During the fiscal year 2025, SUMCO held the Nomination and Remuneration Committee five times in total, and deliberated on the selection of candidate Directors and personnel matters concerning Executive Officers, the systems for remuneration of Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members) and Executive Officers, and individual remuneration amounts of Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members).

Board of Directors/Audit & Supervisory Committee/Nomination and Remuneration Committee Meetings in Fiscal Year 2025

Board of Directors

Audit & Supervisory Committee

Nomination and Remuneration Committee

• Independent Outside Director
• Serving as an Director since March 27, 2025

Executive Remuneration

Matters regarding policy on amounts of remuneration and other payments to officers and determination of calculation method

Details of the Remuneration Policy

The Company’s basic policy for the remuneration of Executive Directors stipulates that the remuneration of Executive Directors comprises a basic remuneration, performance-linked monetary remuneration based on short-term performance, and performance-linked stock remuneration based on medium-to-long term corporate value, which are set within the total remuneration amount determined by resolution of the General Meeting of Shareholders and according to their office and rank. This policy aims to allow Executive Directors to share the interests and risks with shareholders and encourage them to contribute to the improvement of business performance and the medium-to-long term enhancement of corporate value.

Outside Directors and Directors who are Audit and Supervisory Committee Members receive basic remuneration that is only fixed remuneration from the perspective of ensuring the appropriate conduct of their duties such as auditing and the supervision of the execution of business operations. Remuneration for Directors who are Audit and Supervisory Committee Members is determined through deliberations of the Audit and Supervisory Committee Members within the total amount determined by resolution of the General Meeting of Shareholders, and by taking into account the role and duties of each such Member and whether he or she is a full-time or part-time Member.

The total remuneration for all Directors (excluding Directors who are Audit and Supervisory Committee Members) is set to be within 460 million yen annually (of which, the total remuneration for Outside Directors is within 50 million yen annually, excluding employee salary) and the total remuneration for all Directors who are Audit and Supervisory Committee Members is set to be within 110 million yen annually pursuant to the resolution at the 17th Ordinary General Meeting of Shareholders held on March 29, 2016. In addition, the introduction of a performance-linked stock remuneration plan for the Company’s Executive Directors was resolved at the 24th Ordinary General Meeting of Shareholders held on March 29, 2023. This stock remuneration plan includes malus system and clawback system.

The outline of each remuneration plan is as follows.

1. Basic remuneration (monetary remuneration)
   In principle, the basic remuneration for Directors is a fixed amount determined for each office and rank, and paid in cash each month.
2. Performance-linked remuneration (monetary remuneration)
   For Executive Directors, the Company has judged that it is appropriate to use the semi-annual profit attributable to owners of parent as an index for remuneration, and performance-linked monetary remuneration is paid annually according to the calculation method multiplying a coefficient for each office and rank. However, if profit attributable to owners of parent does not meet certain criteria set by the Board of Directors, performance-linked monetary remuneration will not be paid.
   The result of the index pertaining to performance-linked monetary remuneration of Executive Directors for FY2025 are 2,584 million yen in total for the first and second quarters (calculated excluding Subsidy income (amount after tax: 496 million yen)) and ▲14,908 million yen in total for the third and fourth quarters (calculated excluding Subsidy income (amount after tax: 75 million yen)). As a result, performance-linked monetary remuneration is not paid for the business year under review.
3. Performance-linked stock remuneration
   The plan is a stock remuneration plan in which a trust set up by the Company through money contributions acquires shares of the Company, and the number of shares of the Company corresponding to the number of points granted to each Executive Director by the Company will be distributed to each Executive Director through the trust.

The outline of the plan is as follows.

(Notes)

1. The composition ratio of indicators used for calculating the granting points is as follows: ROE at 45%, EBITDA margin at 45%, and GHG emissions reduction rate at 10%.
2. The objective values and actual values of ROE and EBITDA margin used for calculating the granting points in fiscal year 2025 are as follows: (ROE: calculated excluding Subsidy income (amount after tax: 572 million yen))

We have introduced a similar stock-based remuneration plan for the Presidents of our major domestic subsidiaries and for Executive Officers and other management-level employees of the Company.
In addition, a policy on the determination of the ratio of basic remuneration to performance-linked monetary remuneration paid to Executive Directors was resolved at the meeting of the Board of Directors held on February 19, 2021. As performance-linked monetary remuneration and performance-linked stock remuneration is not paid for the business year under review, the ratio of basic remuneration, performance-linked monetary remuneration, and performance-linked stock remuneration is 1:0:0.
For details of the Company’s performance-linked stock remuneration plan, please refer to the press release below.
Announcement regarding Introduction of Performance-Based Stock Compensation Plan for Directors(222KB)

Remuneration Determination Process

The amounts of remuneration and other payments to Directors (excluding Directors who are Audit and Supervisory Committee Members) and their calculation methods are discussed by the Nomination and Remuneration Committee comprising two Internal Directors and three Independent Outside Directors and finalized with the resolution by the Board of Directors. The Nomination and Remuneration Committee, in response to the consultations by the Board of Directors, discusses the appropriateness of the remuneration structure, etc. of the Company’s Directors (excluding Directors who are Audit and Supervisory Committee Members) and Executive Officers, and submits a report to the Board of Directors also taking into consideration an evaluation of the Company’s business results. Upon receiving the report from the Nomination and Remuneration Committee, the Board of Directors determines remuneration and other payments to Directors (excluding Directors who are Audit and Supervisory Committee Members).
In fiscal year 2025, pursuant to the above procedures, the Board of Directors meetings held on June 26, 2025 and December 19, 2025 approved the individual amounts taking into consideration the semi-annual business results outlook.

Amount of remuneration in the recent fiscal year (disclosure by officer category)

Remuneration for Directors for fiscal year 2025

(Notes)

1. The total monetary remuneration for all Directors (excluding Directors who are Audit and Supervisory Committee Members) is within 460 million yen annually (of which, the total remuneration for Outside Directors is within 50 million yen annually) (excluding employee salary) pursuant to the resolution at the 17th Ordinary General Meeting of Shareholders held on March 29, 2016. The number of Directors (excluding Directors who are Audit and Supervisory Committee Members) as of the conclusion of the said Ordinary General Meeting of Shareholders was eight (including two Outside Directors).
2. Separately from the monetary remuneration amount for Directors (excluding Directors who are Audit and Supervisory Committee Members), the amount of performance-linked stock remuneration for Executive Directors was resolved at the 24th Ordinary General Meeting of Shareholders held on March 29, 2023. The maximum amount that the Company will contribute for the delivery of the Company’s shares to Executive Directors during the three fiscal years from the fiscal year ended on December 31, 2023 to the fiscal year ending on December 31, 2025 is 675 million yen in total, and the maximum total number of points to be granted to Executive Directors is 210,000 points per fiscal year (one share of the Company’s stock per point to be granted to Executive Directors). The number of Executive Directors at the conclusion of the said Ordinary General Meeting of Shareholders was four.
3. The total remuneration for all Directors who are Audit and Supervisory Committee Members is within 110 million yen annually pursuant to the resolution at the 17th Ordinary General Meeting of Shareholders held on March 29, 2016. The number of Directors who are Audit and Supervisory Committee Members as of the conclusion of the said Ordinary General Meeting of Shareholders was six (including four Outside Directors).
4. As of the end of fiscal year 2025, there were six (6) Directors (excluding Directors who are Audit and Supervisory Committee Members) and seven (7) Directors who are Audit and Supervisory Committee Members.

Message from Outside Directors

Director (Audit and Supervisory Committee member) Shinichiro Ota

Director (Audit and Supervisory Committee member)　 Anita Killian