Corporate Governance

Our corporate governance recognizes our responsibility to all stakeholders and aims to achieve sustainable growth and increase corporate value over the medium to long term through efficient and sound management based on the Sumitomo Spirit with “Banji-nissei,” “Shinyo-kakujitsu,” and “Fusu-furi” as the guiding principles.

Sumitomo's business has been conducted based on the "Monjuin Shiigaki," the business principles written by Masatomo Sumitomo, the founder of the Sumitomo family about 400 years ago, and spiritual basis of the "Sumitomo Spirit," which has been deepened and developed by Sumitomo's predecessors over many generations.
In order to support sound risk-taking in response to changes in the business environment, Sumitomo Riko will strengthen its governance functions, focusing on enhancing the functions of the Board of Directors.
Based on our management strategy and management issues, we will disclose financial and non-financial information in a timely and appropriate manner to our shareholders and other stakeholders with whom we share growth opportunities and risks. We will also establish a system for management to engage in constructive dialogue with shareholders. In the governance of Sumitomo Riko, we will consider the common interests of shareholders and maintain a sound relationship with the parent company.

The composition of the Board of Directors is determined from the perspective of whether it can appropriately fulfill its management monitoring and supervisory functions based on Sumitomo Riko's business fields, business environment, and business scale.
Specifically, the Board of Directors shall appoint appropriate persons based on their expertise, independence, gender, and internationality.
The current Board of Directors consists of 8 Directors (including 3 Outside Directors) and 5 Audit & Supervisory Board Members (including 3 Outside Audit & Supervisory Board Members), and is of an appropriate size to enable substantive discussions while ensuring a balance between the number of internal and external Directors and the expertise required to cover all business fields.
The expertise and experience of each Director and Audit & Supervisory Board Member are listed below.

Position and Name	Expertise and Experience
	Management	Technology Development	Manufacturing/ MONOZUKURI	Finance/ Accounting	Legal/ Risk Management	Human Resources/ Diversity & Inclusion
Representative Director and President and CEO Kazushi Shimizu	○	○				○
Director Managing Executive Officer Shinichi Waku	○	○	○
Director Managing Executive Officer Hideo Yamane	○			○	○	○
Director Managing Executive Officer Katsuhisa Yano	○	○	○
Director Managing Executive Officer Hideyoshi Yasuda	○		○			○
Outside Director Masaaki Iritani	○				○
Outside Director Shigeru Hanagata	○				○
Outside Director Mariko Miyagi	○					○
Audit & Supervisory Board Member (Full-time) Takehiro Ohashi	○	○	○
Audit & Supervisory Board Member (Full-time) Hirohisa Maeda	○			○	○
Audit & Supervisory Board Member (Outside) Aiko Sekine	○			○		○
Audit & Supervisory Board Member (Outside) Hakaru Hyakushima	○			○	○
Audit & Supervisory Board Member (Outside) Tatsuko Koike	○				○	○

Directors who execute operations shall be selected from among those who are well acquainted with Sumitomo Riko's management and business, and who are capable of performing their duties as members of Sumitomo Riko's management team to meet the expectations of shareholders.
For Outside Directors and Audit & Supervisory Board Members, Sumitomo Riko appoints persons with advanced knowledge and abundant experience, such as lawyers, certified public accountants, experienced managers, academic experts, and government officials, as well as persons with knowledge in medium-term management issues (globalization or new business development).
Since Sumitomo Riko is also a so-called "listed subsidiary," several highly independent persons shall be appointed as Outside Directors.
In order to enhance objectivity, the Nomination and Remuneration Advisory Committee, an advisory body to the Board of Directors, reports on matters to be brought up for discussion at the General Meeting of Shareholders under the criteria for the election and dismissal of directors, and the Board of Directors respects these reports.

At least once each year, the Board of Directors of Sumitomo Riko analyzes and evaluates the effectiveness of the Board of Directors at a Board of Directors meeting or other meetings.
Please refer to the Corporate Governance Report (*Japanese) for the results of the evaluation.

Compensation for Directors is linked to shareholder returns so that it fully functions as an incentive to sustainably increase corporate value. And in determining the compensation of individual Directors, our basic policy is to set an appropriate level based on the responsibilities of each position. Specifically, compensation for Directors (excluding Outside Directors) consists of base compensation as fixed compensation and bonuses as performance-linked compensation, etc. Outside directors are paid only base compensation as fixed compensation in order to ensure their independence.
Based on the resolution of the Board of Directors, the Chairperson of the Board (or Representative Director and President & CEO in the event of a vacancy in the office of the Chairperson of the Board) shall be delegated the authority to determine the amount of base compensation for each Director and the allocation of bonuses based on the evaluation of the performance of the businesses for which each Director (excluding Outside Directors) is responsible, and the amount thereof.
The Chairperson of the Board (or Representative Director and President & CEO in the event of a vacancy in the office of the Chairperson of the Board) shall consult with the Nomination and Remuneration Advisory Committee and obtain its report in order to exercise such authority appropriately, and shall decide these matters respecting the content of said report.