Corporate Governance
Governance That Underpins Value Creation
Corporate Governance
SHIONOGI’s corporate governance
Based on SHIONOGI Group Heritage (The Company Policy of SHIONOGI), SHIONOGI recognizes that its social mission is multifaceted. It involves not only providing useful and highly safe pharmaceuticals, but also offering various healthcare services tailored to customer needs, to help improve the health and medical care of people around the world and realize a high quality of life.
Guided by our firm conviction that fulfilling this mission will lead to the sustainable enhancement of corporate value, we will practice transparent and sincere management—specifically, by engaging in constructive dialogue with our stakeholders to implement the necessary measures to continuously adapt to changes in the business environment.
Features of SHIONOGI’s corporate governance
Balance among our four stakeholder groups
SHIONOGI incorporates the perspectives of its four groups of stakeholders—customers, society, shareholders and investors, and employees—in maintaining transparent and proper business management that treats its stakeholders fairly and is responsive to the expectations of society.
Diversity of the Board of Directors
To further strengthen our framework in view of the progress in our business development, SHIONOGI is building the necessary framework from the standpoint of diversity and such factors as expertise and experience. By appointing three female directors among its twelve directors and one foreign national director, we have been striving to ensure diversity.
Management transparency
By appointing eight Outside Directors, who comprise a majority of SHIONOGI’s twelve directors, we maintain a structure to advance fairer and more efficient management—which thereby increases its transparency. Also, based on our Disclosure Policy, we continue to disclose our corporate information to all of our stakeholders in a fair, timely, and appropriate manner.
Accelerating decision-making
SHIONOGI defines corporate governance as the mechanism enabling SHIONOGI to make transparent, fair, prompt, and resolute decisions based on the perspectives of customers, society, shareholders, and employees. Following the transition to a company with an Audit and Supervisory Committee, the Board is distinguishing more clearly between matters requiring Board deliberation and those that can be delegated. Authority is being transferred to the executive side in stages so that the Board can devote more attention to medium- to long-term Group strategy and decisions can be made more swiftly.
Status of compliance with the Corporate Governance Code We comply as a basic rule with the principles of the Corporate Governance Code. For more information, please see our Corporate Governance Report (updated June 2026).
Corporate governance structure
SHIONOGI defines corporate governance as the mechanism enabling SHIONOGI to make transparent, fair, prompt, and resolute decisions based on the perspectives of customers, society, shareholders, and employees. Following the transition to a company with an Audit and Supervisory Committee, the Board is distinguishing more clearly between matters requiring Board deliberation and those that can be delegated. Authority is being transferred to the executive side in stages so that the Board can devote more attention to medium- to long-term Group strategy and decisions can be made more swiftly.
Based on this approach, SHIONOGI transitioned to a company with an Audit and Supervisory Committee in fiscal 2025 to further enhance the establishment and operation of its internal control systems and to establish a framework in which the Audit and Supervisory Committee can more effectively audit and supervise the overall decision-making processes of the executive side by utilizing the internal audit function.
Corporate governance achievements in fiscal 2025
In fiscal 2025, beginning with the transition to a company with an Audit and Supervisory Committee, SHIONOGI further strengthened the Board’s supervisory function and deepened discussions of important management issues aimed at enhancing corporate value.
Under the new governance structure, the Board shared the Audit and Supervisory Committee’s deliberations, recommendations, and reports, clarifying the matters that warranted particular Board attention. Oversight of management strategy, major business investments, and subsequent progress was also enhanced. The effectiveness of both the Board of Directors and the Audit and Supervisory Committee was evaluated, and the results were used to identify issues and initiatives for improving their future operation.
With the cost of capital and market assessments in mind, the Board analyzed and evaluated the Medium-Term Business Plan and business portfolio and discussed cash allocation that balances proactive growth investment with shareholder returns.
For details on the roles of meetings, committees, and governance structures, as well as the attendance of each Director at Board and committee meetings, please refer to the Integrated Report 2026 (pp. 71–72).
Examples of matters deliberated by the Board of Directors
Matters actually deliberated by the Board of Directors in fiscal 2025
Example of Board of Directors deliberations (1)
Agreement to acquire the edaravone business
・Approved the acquisition of Tanabe Pharma’s edaravone business
・Approved the detailed transaction structure
Management explained that the acquisition of Tanabe Pharma’s edaravone business, primarily a global business for amyotrophic lateral sclerosis, was intended to accelerate the establishment of SHIONOGI’s businesses in QOL diseases and rare diseases and strengthen overseas operations in line with the Medium-Term Business Plan and SHIONOGI’s long-term direction. The Board then discussed the acquisition, execution of a share and asset purchase agreement, external financing for the upfront payment in light of SHIONOGI’s balance sheet, and a transaction structure under which Shionogi Inc. would hold the assets and receive acquisition funding through an equity contribution from Shionogi & Co., Ltd.
Main discussions
・Confirmed the strategic rationale for the acquisition and its growth opportunities
・Discussed post-acquisition concerns, including the approach to PMI and developments in the United States’ most-favored-nation (MFN) policy
The Board discussed the strategic rationale for acquiring the edaravone business, growth opportunities in the U.S. market, and the establishment of a business platform in rare diseases. Outside Directors asked about retention measures for key personnel, the PMI structure, supply chain stability, and the people and systems needed to support rapid expansion of the U.S. business. The Board also considered the potential impact of the U.S. most-favored-nation (MFN) drug pricing policy and the GUARD price adjustment program, the effects on patients and reputational risks if sales were discontinued, revenue scenarios, and the reasonableness of the acquisition price. Management explained that NPV would remain positive even in a downside scenario and that profitability would be secured through cost reductions, sales growth, and other measures. Directors expressed support for proceeding with the transaction as aligned with the medium- to long-term strategy, and the Board approved the proposal as presented.
Example of Board of Directors deliberations (2)
Agreement with BARDA for cefiderocol and strengthening of production capabilities
・Approved the agreement with BARDA to support preparedness for public health emergencies
・Confirmed the direction of a stable supply framework using production sites in both Japan and the United States
Management explained that the agreement with the U.S. Biomedical Advanced Research and Development Authority (BARDA) is intended to strengthen U.S. preparedness for public health emergencies through support for the development, manufacturing, procurement, and stockpiling of Fetroja (cefiderocol). The agreement covers expanded indications for target infections, pediatric development, establishment of production capabilities in the U.S., and product procurement and stockpiling. Management also described plans to strengthen production and quality control at Japanese plants while constructing facilities and transferring technology in the U.S., thereby securing stable supply from production sites in both countries. To execute the long-term agreement reliably, Management outlined a structure in which internal and external stakeholders would collaborate on development, production, and supply, together with arrangements for appropriate progress monitoring. The Board then deliberated the principal terms and conditions, including the contract period, scope of funding, and quality control requirements.
Main discussions
・Discussed the economic security implications of antibiotic production and raw material procurement risks
・Discussed strengthening the domestic production base and transferring technology to the United States
The Board discussed securing production bases in both Japan and the U.S., taking into account the current dependence on mainland China and India for antibiotics’ raw materials and the associated economic security risks, as well as differences in the speed and scale of support from the U.S. and Japanese governments. It confirmed the direction of further advancing technologies such as continuous and unmanned production and reinforcing the domestic production base, including for active pharmaceutical ingredients, by drawing on production and quality management expertise developed at Japanese plants. It also confirmed plans to deploy this expertise and technology to U.S. sites to reduce labor and process requirements. Directors exchanged views on the ability to meet stockpiling obligations, cost recovery, business profitability, raw material procurement, export restrictions, regional supply, and management of stockpiled products. The Board shared the view that SHIONOGI should maintain and strengthen its domestic sites while combining them with overseas sites to build a more resilient global production and supply network, and approved the proposal as presented.
Messages from the chairs of the Board of Directors and the Audit and Supervisory Committee
From the perspective of oversight
Chair of the Board of Directors
The role of the Board of Directors in a new phase of growth
Keiichi Ando
Chair of the Board of Directors
Independent Outside Director
Fiscal 2025 was a year in which SHIONOGI substantially expanded its medium- to long-term growth opportunities through proactive business investment. The Board of Directors deliberated several times on major transactions, including a series of transactions involving JT Group’s pharmaceutical business, the acquisition of the edaravone business, and an additional investment in ViiV Healthcare. The discussions focused on alignment with SHIONOGI Group Vision and the strategies for growth beyond it, as well as the feasibility of creating corporate value. As Chair, I believe the Board was able to reach timely decisions without missing opportunities after thorough deliberation of these important matters. This was possible because SHIONOGI’s governance structure as a company with an Audit and Supervisory Committee functioned effectively in the first year after its adoption. The Directors clearly understood their respective roles and responsibilities, while the Audit and Supervisory Committee provided the Board with detailed, timely reports and recommendations informed by its assessment of risk. This allowed the Board to concentrate more fully on medium- to long-term management strategy.
The most important question now is whether these investments can create value that exceeds expectations within the expected time frame. The Board must therefore continue to monitor progress in strengthening the earnings base, expanding the business portfolio, and reinforcing the R&D platform and U.S. business. It will also closely oversee post-acquisition integration, including synergy realization and the integration of people and organizations. The Board shares the view that initiatives in fiscal 2026 will be critical in shaping SHIONOGI’s next growth strategy from fiscal 2027 onward. One of its key oversight priorities will be to determine whether SHIONOGI is responding effectively to changes in the internal and external environment and translating investment outcomes into a stronger foundation for growth. As Chair of the Board and an Outside Director, I will closely assess progress, encourage course correction where needed, and fulfill my responsibility to help ensure that the new Medium-Term Business Plan beginning in fiscal 2027 provides a clear path to SHIONOGI’s next stage of growth.
Chair of the Audit and Supervisory Committee
Enhancing the quality of management decisions and building trust in governance
Yoriko Goto
Chair of the Audit and Supervisory Committee
Independent Outside Director
Fiscal 2025 was SHIONOGI’s first year under its new governance structure as a company with an Audit and Supervisory Committee. I believe the effectiveness of oversight has steadily increased through coordinated audits by the Committee and close coordination with the Board of Directors.
The role of the Audit and Supervisory Committee goes beyond reviewing the legality of management decisions and business execution. The Committee also actively advises management on improving the quality of those decisions and operations and preventing risks from materializing. We focus on whether decisions are made transparently, on the basis of adequate information and diverse perspectives, and whether they appropriately balance growth opportunities and risk. We also examine whether the foundations supporting business execution are properly established and operating effectively. To that end, the Committee gathers necessary information through the Audit and Supervisory Committee Office and in coordination with the Internal Control Department and the risk management function. We also seek to understand conditions on the ground through visits to plants and offices and dialogue with employees.
The Committee reports its audit policy and plan to the Board in advance and coordinates Board agenda items. At the start of each Board meeting, the Committee presents reports and recommendations. These cover issues identified in business execution, matters that warrant Board deliberation, perspectives the Committee considers important, and expectations for the executive side. Sharing this information with all Directors allows the Board to focus more closely on important management matters, deepen deliberations, and make timely and appropriate decisions.
SHIONOGI is now at a turning point on the path to renewed growth. As proactive business investment and M&A bring major changes to the operating environment, the Committee is closely monitoring PMI progress for major transactions and the availability of the necessary people, organizational structures, and business foundations. It is also monitoring whether the organizations are developing a shared, open culture. An organization in which issues and concerns are shared promptly provides an essential foundation for sustainable growth.
The Audit and Supervisory Committee will continue to strengthen the effectiveness of its audit and supervisory functions through constructive dialogue with management and fuller Board discussions, thereby helping improve the quality of management decisions.
Skills required of directors and the Board of Directors
Skill matrix (as of July 1, 2026)
To realize SHIONOGI Group Heritage globally and achieve the Medium-Term Business Plan STS2030 Revision, we believe it is necessary for SHIONOGI to make transparent, fair, prompt, and decisive decisions based on the perspectives of customers, society, shareholders, and employees. To enhance the supervisory function of the Board of Directors over business execution, increase management transparency, and promote highly fair management, we aim for an appropriate balance of diverse skills, including experience in management, specialized knowledge in law and finance, medical and pharmaceutical viewpoints, and knowledge and experience in international business among the directors and the Board of Directors.
Since 2020, SHIONOGI has reviewed and added skill categories to its skill matrix in line with the development of its business and its intended management direction. In fiscal 2024, SHIONOGI reorganized the categories and changed the format to show only the areas in which each officer is expected to demonstrate particular expertise.
Requirements for areas of particular expertise
| Skill | Requirements |
|---|---|
| Corporate management/Management strategy | • Experience, a proven track record, and demonstrated leadership in corporate management and business management, including overseas operations • Leadership in balancing the interests of all stakeholders in light of social issues, reflecting those interests in management strategy, and driving implementation • Deep knowledge and understanding of local business environments and practices • Experience, expertise, and foresight in pursuing business opportunities such as M&A, executing post-merger integration, and building competitive advantages through partnerships to support further growth |
| Finance/Accounting/Tax affairs | • Advanced expertise in finance, accounting, and tax needed to deliver accurate reporting under International Financial Reporting Standards and make investment decisions that drive business growth globally |
| Personnel & labor/Human resources development/D&I | • Awareness of and respect for diversity in nationality, individual values and beliefs, and religion, as well as the cultures, customs, and lifestyles of different countries and regions • Experience in creating work environments and practices that enable every Group employee to continue learning, build capabilities, and contribute to business growth by applying those capabilities |
| Science/Technology/Innovation | • Management experience in R&D for products and services, including new businesses • Advanced expertise in leading innovation by combining cutting-edge science, technology, digital capabilities, and IT |
| Production/Quality/Supply chains | • Expertise in procuring raw materials with due consideration for business issues throughout the supply chain and environmental impacts • Management experience in manufacturing high-quality products and ensuring stable supply |
| Sales/Marketing | • Strategic management experience in marketing and sales of a wide range of products and services |
| DX promotion | • Experience and a track record of aligning a medium- to long-term management vision with a DX strategy to transform management and enhance corporate value • Advanced expertise in using data and digital technologies to transform business models, operations, organizations, processes, and corporate culture and build competitive advantage |
| Legal affairs/Risk management | • Expertise in identifying business opportunities and threats arising from changes in the business environment, leading or overseeing responses to identified risks, and supporting sustainable business growth • Advanced expertise in promoting strict compliance with the laws and regulations of every country in which SHIONOGI operates • Advanced expertise in developing highly effective intellectual property strategies that protect SHIONOGI’s rights |
Mechanisms to enhance effectiveness
Meetings that serve as a venue for the outside directors and the President to exchange opinions are in principle held three times per year. These opinion exchanges take place with the objective of enhancing the quality of discussions at the Board of Directors meetings. Opinion exchange meetings are convened with outside directors and the Representative Director, President and CEO in attendance, and topics for discussion include recent trends in the healthcare industry and Company business, as well as the status of operations. Three meetings were held in fiscal 2025.
Outside directors information exchange and study sessions/Supervisory Unit report sessions
In order to deepen understanding of SHIONOGI’s business, outside directors information exchange and study sessions, which are attended by outside directors and senior management of SHIONOGI, are held. In fiscal 2025, a study session on the U.S. pharmaceutical market and the U.S. drug pricing and insurance systems was held in preparation for the next Medium-Term Business Plan. Additionally, reports on the status of business execution were provided to the Board of Directors meeting by each Senior Vice President of Supervisory Unit, sharing information on business progress and current challenges at SHIONOGI.
Succession plan
Succession planning for the President (CEO) and Directors, and development of Corporate Officers and Associate Corporate Officers
SHIONOGI has criteria to appoint, reappoint, and dismiss directors and the president (CEO), and defined the requirements necessary for SHIONOGI to conduct sustainable management and continue fulfilling its responsibilities to society. In terms of succession planning, the Nomination Advisory Committee lists Corporate Officers who are candidates to succeed the president (CEO) and directors, and conducts assessments of each candidate’s current status. While confirming the experience and achievements of potential successors in relation to appointment requirements and the skill matrix, the Committee updates itself on each candidate’s performance, results of the external assessment, and self-improvement over the past year, in order to exchange opinions on the evaluation and development of each candidate as well as deliberate on candidate replacements.
In fiscal 2025, SHIONOGI conducted a management talent assessment of Corporate Officers to provide an objective view of their leadership and management capabilities. The results clarified each candidate’s strengths and development needs and are being reflected in discussions on evaluation and development and in succession planning.
Developing Corporate Officers and Associate Corporate Officers
Corporate Officers and Associate Corporate Officers—candidates for the next generation of management—are selected after they have gained practical management experience through opportunities such as the President’s Management Seminar and appointments to Group company executive positions. We are continuously developing candidates by having them experience business execution in multiple departments and organizations to diversify skills and integrate strengths. To help evaluate their expertise and experience, we are making efforts to increase their interaction with outside directors by having them explain proposals submitted to the Board of Directors.
For Associate Corporate Officers, specifically, we held three informal meetings in fiscal 2025 that provide them with opportunities to converse with outside directors and cultivate a mindset essential for management. We also hold networking events that bring together outside directors, Corporate Officers, and Associate Corporate Officers, providing a venue for outside directors to understand the character of each management candidate.
| Japan 15 | United States 2 | Europe 1 |
Composition of Associate Corporate Officers in fiscal 2025 (persons)
Remuneration for officers
Remuneration system, structure, and fiscal 2025 results
The Compensation Advisory Committee, which consists of a majority of outside directors, deliberates carefully on the matter of officers’ compensation and discusses the ideal state of and various issues concerning remuneration for directors and corporate officers, verifies the levels of compensation every year, and deliberates the compensation system and performance evaluation system for the following fiscal year.
Remuneration structure
Base remuneration : Performance-linked remuneration, etc. : Non-monetary remuneration, etc. = 1:1:1
Total director remuneration is determined within limits set by resolution of the General Meeting of Shareholders. This consists of base monthly remuneration, performance-linked bonuses determined by results for the fiscal year and other factors, and since fiscal 2018, restricted stock compensation (medium-term performance-linked and long-term). Also, Directors who are Audit and Supervisory Committee members and Outside Directors receive only base remuneration.
Base remuneration Determined based on the basic remuneration table according to the position and role of each director, taking into consideration the business environment and public trends. |
Performance-linked remuneration Determined based on a calculation table based on performance, such as achievement of target profits for each fiscal year, as a short-term incentive. |
Non-monetary remuneration Incentives to further increase the linkage with medium- to long-term business performance and to promote sustainable enhancement of corporate value for the Company’s directors (excluding directors who are Audit and Supervisory Committee members and Outside Directors). |
Performance evaluation for medium-term performance-linked stock compensation (grants for fiscal 2023–2025)
Stock-based compensation is granted each July in accordance with a grant table based on each Director’s position and responsibilities. For the shares granted during Phase 2 of STS2030 Revision (fiscal 2023–2030), covering the three years from fiscal 2023 through fiscal 2025, performance is evaluated using revenue, CAGR of overseas sales, EBITDA, ROE, and the Company’s total shareholder return ranking among 11 peer companies including SHIONOGI (relative TSR) as quantitative indicators. ESG and compliance performance and the status of investments are also considered in determining the percentage of shares for which transfer restrictions will be lifted (0%–100%). When the restrictions are lifted, cash equal to 50% of the stock compensation amount, calculated using the share price at that time, is also paid.
The performance evaluation indicators for medium-term performance-linked stock compensation are shown below. Following a comprehensive assessment of these quantitative indicators together with ESG and compliance performance and the status of investments, the Board of Directors set the percentage of transfer restrictions to be lifted at 90% for grants covering fiscal 2023 through fiscal 2025.
| Item | FY2025 target | FY2025 result |
|---|---|---|
| Revenue (billions of yen) | 550.0 | 499.7 |
| Overseas net sales CAGR (%) *1 | 50 | 15.2 |
| EBITDA (billions of yen) | 200.0 | 187.7 |
| ROE (%) | 14.0 or more | 13.7 |
| Relative TSR (Rank/11 companies) *2 | ー |
4th |
*1 Starting from fiscal 2022 *2 Relative TSR is calculated over the three-year period from fiscal 2023 to fiscal 2025
Actual remuneration for fiscal 2025 was as follows
As a result, the proportion of base remuneration for fiscal 2025 is about 36%, due to the achievement status of the current profit target and the impact of stock prices on stock-based compensation. The Board of Directors confirms that the details of individual remuneration, etc. for directors for the current fiscal year are in line with the policy for determination through deliberations and reports at Board of Directors and Compensation Advisory Committee meetings.
The maximum amount of executive remuneration approved by resolution at the General Meeting of Shareholders on June 18, 2025, is as follows: for directors (excluding directors who are Audit and Supervisory Committee members): up to 2 billion yen annually (6 directors, including 4 Outside Directors; excludes employee salaries for directors who concurrently serve as employees); for directors who are Audit and Supervisory Committee members: up to 750 million yen annually (5 persons as of the conclusion of the relevant Annual General Meeting of Shareholders). Furthermore, restricted stock compensation is granted to directors, excluding directors who are Audit and Supervisory Committee members and Outside Directors. The total number of shares of the Company’s common stock to be issued or disposed of for this purpose shall be up to 250,000 shares per year, and the total amount of monetary claims to be paid as compensation for the granting of such restricted stock, when combined with other forms of remuneration for directors, shall be up to 2.0 billion yen per year (2 directors; excludes employee salaries for directors who concurrently serve as employees).
Total consolidated remuneration by director* (Fiscal 2025; millions of yen) |
Position | Base remuneration | Performance-linked remuneration, etc.** |
Non-monetary remuneration, etc.*** |
Other**** | Total |
|---|---|---|---|---|---|---|
| Isao Teshirogi | Director | 96 | 96 | 110 | ー | 302 |
| John Keller | Director | 120 | 156 | 34 | 12 | 324 |
For the total remuneration of Directors, Directors who are Audit and Supervisory Committee members, and Audit & Supervisory Board Members (including the number of persons by category and a breakdown by type of remuneration), please refer to the table on page 81 of the original report.
* Remuneration, etc. paid in local currencies has been translated into yen at the Company’s average internal exchange rate for fiscal 2025.
** The amount of “Performance-linked remuneration, etc.” above is the amount of provision for Directors’ bonuses for the fiscal year.
*** The amount of “Non-monetary remuneration, etc.” above is the amount recorded as an expense in the fiscal year.
**** “Other” represents the equivalent value of fringe benefits. It excludes ¥267 million in tax equalization and other amounts related to international assignments,
which are intended to ensure compensation equivalent to the amount that would have been paid had the assignees not been posted overseas.
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