Daifuku Report 2019

 The Board of Directors is empowered to determine amounts of remuneration, etc. of officers and the policy on determining calculation methods. The remuneration for the management team is resolved by the Board of Directors after the Advisory Committee has examined it based on remuneration evaluation criteria and made a report, and then determination of amounts of such remuneration, etc. is left again to President and CEO Hiroshi Geshiro within the evaluation criteria. The remuneration for Audit & Supervisory Board members will be determined by the Audit & Supervisory Board after the Advisory Committee has examined it based on remuneration evaluation criteria and made a report. In the policy on the determination of the payment ratio of the performance-based and other compensation, the payment ratio is not fixed but varies according to the business performance for the fiscal year because we mainly use net sales and operating income as indicators to create a system to easily reflect the performance-based results. The reason why we have adopted these indicators is that they represent the results of all the officers and employees making a concerted effort.Remunerations for Board members (FY2018)Number of individualsAmounts paidDirectors (excluding outside directors)8Total remuneration of 613 million yen (Base salary: 281 million yen, bonus: 305 million yen, the Board Benefit Trust: 26 million yen)Audit & Supervisory Board members (excluding outside members)2Total remuneration of 79 million yen (Base salary: 50 million yen, bonus: 29 million yen)Outside officers7Total remuneration of 71 million yen (Base salary: 71 million yen)Disclosure of individual directors’ remunerationNameTotal remunerationAkio Tanaka129 million yenHiroshi Geshiro129 million yenMikio Inohara103 million yenNote: The listing of the total of consolidated remuneration, etc. is restricted to persons with 100 million yen or more.Initiatives for strengthening corporate governance structureEvaluation of the Board of Directors’ effectivenessRegarding the evaluation of the Board of Directors’ effectiveness, Daifuku has a basic policy of striving to improve its effectiveness by continuously implementing the PDCA cycle. In fiscal 2018, the Company used an external organization, in the same manner as the previous fiscal year, for evaluation of the Board of Directors’ effectiveness to ensure anonymity and collect more impartial opinions. The results were analyzed and compared with other companies. Compared to the last time, total average fell slightly, with comments from the external organization, including “We found the increased awareness for corporate governance, which is a positive trend.”1. Evaluation methodStep 1: The Company conducted a blank questionnaire survey of directors and Audit & Supervisory Board members concerning the Board of Directors’ effectiveness (through the external organization).Step 2: The results of the survey were analyzed at regular meetings of representative directors, outside directors, and Audit & Supervisory Board members, and the evaluation was reported at a meeting of the Board of Directors.2. Evaluation resultsComprehensive evaluation• Several positive opinions were expressed such as, “the current management system is appropriate.” All members shared the agenda rationale and priority issues such as “the composition of the board of directors” and “development and operation of the successor plan.” We were able to establish an environment that facilitates open discussion and efficient management.• Compared to the other companies, most of the items won higher points than average. The items that won lower points than the average included the prior preparation efforts made by directors themselves, which were seen as a matter of awareness level.Issues• In relation to “training suitable for directors/auditors,” a number of frank opinions were raised, and new issues became clear.• Regarding the issue of “early distribution of materials” that was taken up in past surveys, it was recognized that although at a lower level compared to other companies, we would continue to consider even earlier distribution and promote active participation and thorough discussions.Cross-shareholding strategy• Daifuku reviews the appropriateness of its cross-shareholdings and reports the result at the meeting of Board of Directors once a year.  Shares of other listed companies held by Daifuku, including those held as cross-shareholdings, shall be kept to the minimum necessary or reduced, in principle. On the other hand, Daifuku has established a firm relationship of trust with its customers through after-sales services as well as the delivery of products. Circumstances including these trade relations shall also be taken into consideration when the economic rationale of cross-shareholdings, such as market capitalization, book value, transaction amounts, dividends, ROE, and risk of shareholdings, is examined. The shares, which the Board of Directors regards as having no significance, shall be sold on a timely basis.47Daifuku Report 2019

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