Corporate Governance

Basic stance

Under the company creed and its management philosophy, which is based on changes in the social and business environment, the Daifuku Group contributes to the development of society and the economy as a whole, continuously enhancing the effectiveness of corporate governance to ahieve sustainable growth and increase corporate value over the medium to long term.

In accordance with this basic stance, we have established the Daifuku Group Basic Policy for Corporate Governance, and have summarized the status of efforts for the Corporate Governance Code. For details, please see the documents below:

Daifuku Group Basic Policy for Corporate Governance (750 KB)
Disclosure Based on the Principles of Japan’s Corporate Governance Code (671 KB)

The table below shows the main points required by the Corporate Governance Code and the Company’s response status.

Corporate governance system

Transition in the composition of the Board of Directors elected at the Annual General Meeting of Shareholders

• * Outside Director Mr. Kaku Kato passed away on October 13, 2025 and retired on the same date. However, the number of outside directors stated is as of the conclusion of the Ordinary General Meeting of Shareholders held on March 28, 2025.

Independence standards for outside directors and outside members of the Audit & Supervisory Board

At Daifuku, outside directors and outside members of the Audit & Supervisory Board are considered independent if they do not fall under any of Articles 1 to 5 below.

Article 1

A person who falls or fell under any of the following in the last three years:

• A person who executes business of a company, etc., that is a key customer of Daifuku or whose key business partner is Daifuku^*1
• A lawyer who belongs to a law firm that has concluded an advisory contract with Daifuku or its subsidiary and who was actually in charge of legal business for Daifuku, a certified public accountant (or a certified tax accountant) who was an accounting auditor or accounting adviser of Daifuku or its subsidiary, or an employee, partner, or staff member who belongs to an auditing firm (or tax accountant corporation) that is an accounting auditor or accounting adviser of Daifuku or its subsidiary and who was actually in charge of the auditing service for Daifuku
• A lawyer, certified public accountant, or certified tax accountant, if not applicable to the above item 2, who provides specialized services, etc., to Daifuku by receiving a large amount^*2 of money or assets other than remuneration for an officer, directly from the company
• An officer or employee of a company, etc., that is a major shareholder^*3 of Daifuku

Article 2

An officer or employee of Daifuku’s subsidiary or a person who held such a position during the 10 years before being appointed as such status

Article 3

An executive board member or any other person who executes business of an organization that receives donations or grants exceeding a certain amount^*4 from Daifuku (such as a public interest incorporated foundation, a public interest incorporated association, or a non-profit corporation)

Article 4

The spouse or a relative within the second degree of relationship of a person who falls under any of Articles 1 to 3 above, or a relative living together with such a person

Article 5

A person who does not fall under any of Articles 1 to 4 above, but who is deemed likely to have a virtual conflict of interest with Daifuku due to their relationship with the company

• *1 A customer from whom Daifuku received payment of at least 2% of the amount of Daifuku’s annual consolidated net sales in the most recent fiscal year, or a business partner who received payment from Daifuku of at least 2% of the amount of its annual consolidated net sales in the most recent fiscal year
• *2 The annual average for the last three fiscal years of 10 million yen or more
• *3A shareholder with 10% or more of the voting rights
• *4The annual average for the last three fiscal years of 10 million yen or more, or 30% of the average total annual expenditure of the organization, whichever is larger

Outline of executive remuneration

• *1 Outside directors and outside members of Audit & Supervisory Board members are not eligible for payment of performance-linked remuneration (variable).
• *2 Taking into consideration the results and progress through the fiscal year ended December 31, 2025, we updated the 2030 Vision and management targets for 2027 on February 12, 2026. For details, please refere to the "Vision and Four-Year Business Plan" below. In addition, as for the financial indicators for the BBT, since the four-year business plan has been revised, the calculation will be made by totaling the number of items achieved during the periods before and after the revision.
  Vision and Four-Year Business Plan

Basic remuneration

Basic remuneration is determined based on fixed remuneration for executive remuneration by position. Basic remuneration is paid monthly in consideration of the levels paid by other companies and based on a comprehensive consideration of qualification, position, and performance of the Company.

Performance-linked remuneration—Bonus

Bonuses are short-term performance-linked remuneration for directors and take the form of monetary remuneration to be paid at a fixed time each fiscal year, in accordance with the evaluation of performance for each fiscal year. Bonuses are calculated by setting the amount of total resources linked to consolidated net income and ESG indicators (safety and the environment) for each fiscal year, and by determining the amount to be allocated to each individual based on two factors: the basic component determined by qualification and job title, and the component of individual performance evaluated based on quantitative indicators (growth rate of net sales and margin) and qualitative indicators (such as roles and initiatives for sustainable growth). The allocation ratio is 50% basic component and 50% performance-linked evaluation component.

Consolidated net income, growth rate of net sales, margin, and improvement rate of margin are used as indicators for calculating bonuses to ensure consistency with the achievement of the Group’s management targets and to raise awareness of improving short-term performance. In addition, ESG-related indicators (achievement of occupational safety and CO₂ emissions reduction targets) are used to clarify that efforts related to sustainability issues are reflected in remuneration as Company performance.

Performance-linked remuneration—non-monetary remuneration, BBT

The BBT, a performance-linked non-monetary remuneration scheme, grants points equivalent to stocks based on performance and ESG initiatives during each fiscal year and the three- or four-year business plan period. Directors are paid Company shares and money according to accumulated points at the time of retirement. The scheme aims to further clarify the linkage of directors’ remuneration and the Company’s business performance as well as its stock value, which enables directors to share the benefit of increase in stock value and the risk of decrease in stock value with shareholders. By doing so, it is expected to raise awareness in directors to contribute to boosting corporate value in the medium to long terms.

Malus clause

With respect to BBT before the vesting of rights among directors’ remuneration, for the purpose of ensuring sound management, the Company has established internal regulations stipulating that, in the event of certain circumstances concerning directors, such director may not acquire the right to receive benefits of BBT upon resolution of the Board of Directors

Composition of remuneration

For the President and CEO, the remuneration structure is designed so that the weight of performance-linked remuneration is greater than that of other directors in light of the significant responsibility for business performance. The following shows the composition ratio of the overall payments for the fiscal year ended December 31, 2025.

Remuneration paid by type of officer for the fiscal year ended December 31, 2025

For details of the outline and calculation method of the remuneration system for directors for the fiscal year ended December 31, 2025, see “Remuneration for officers” in our securities reports.

Securities Report
Securities Report (Japanese version)

• *The English version of the 110th Business Term Securities Report is scheduled to be disclosed in June, 2026.

Audit & Supervisory Board Office

To enhance the effectiveness of audits conducted by Audit & Supervisory Board members and the Audit & Supervisory Board, the Company has established the Audit & Supervisory Board Office to assist with the duties of Audit & Supervisory Board members and appointed an audit officer of the same rank as a corporate officer as the general manager of the Office.

Basic policy

The Company’s basic policy is to engage in constructive dialogue that contributes to enhancing corporate value over the medium to long term. Through quarterly results briefings, IR Day, one on one meetings and interviews, and other opportunities, the Company continuously provides timely and appropriate information and conducts two-way communication. Insights obtained through dialogue are regularly reported to the Board of Directors and, as necessary, are utilized in reviewing and improving management policies, business plans, capital policies, and other matters.

Information disclosure to shareholders and investors

Centered on the Daifuku Report as integrated reporting and the Company’s website, the Company appropriately discloses and continuously updates information on priority topics and KPIs linked to its long-term vision and four-year business plan, including their progress, as well as the status of ESG evaluations.

At quarterly results briefings, the Representative Directors and the CFO give presentations, and presentations by executive officers responsible for major business divisions are also provided semiannually. At the annual IR Day, executives responsible for business divisions and ESG, outside directors, and other participants provide explanations and engage in dialogue, including in depth discussions on topics of high interest.

Framework and initiatives for dialogue with shareholders and investors

Depending on investor attributes and the purpose of dialogue, the Representative Directors, the CFO, executive officers responsible for business divisions, the executive officer responsible for ESG, the executive officer in charge of IR, the General Manager of the IR Department, and others respond to individual meetings and small meetings throughout the year. In the fiscal year ended December 31, 2025, the cumulative number of shareholder and investor engagements was 1,726 companies (the annual engagement target for each year during the four-year business plan period is 1,200 companies).

Key examples of reflecting views and feedback obtained through dialogue in management include expanding shareholder returns (raising the consolidated payout ratio to 35% or more each fiscal year and conducting timely share repurchases), eliminating the parent child listing structure (making Contec Co., Ltd. a wholly owned subsidiary), reducing cross-shareholdings, executing a stock split, increasing the ratio of outside directors and ensuring diversity of the Board of Directors, revising CO2 emission reduction targets, and introducing ESG indicators into executive compensation. In addition, based on topics of interest, the Company continues to promote initiatives to improve capital efficiency, including shortening the cash conversion cycle (CCC), strengthening balance sheet management by business division and introducing ROIC tree analysis, and establishing and commencing the operation of investment guidelines.

Major themes and areas of interest in dialogue with shareholders and investors

• Medium- to long-term management policies and management strategy, and progress on the long-term vision 2030 and the four-year business plan for 2027
• Market environment and outlook, growth strategy, business portfolio, business model, and competitive advantages
• Policies on growth investments and returns, and cash allocation
• Shareholder return policy (consolidated payout ratio of 35% or more each fiscal year and the approach to share repurchases)
• ESG initiatives (progress on materiality and KPIs, and the status of obtaining external evaluations)

Status of dialogue with shareholders and investors for the fiscal year ended December 2025

Basic policy

Our basic policy is to limit shareholdings, including shares held as cross-shareholdings, to the minimum necessary and to reduce them, and the Board of Directors confirms the status of individual holdings every year. In principle, we will no longer hold new shares for strategic purposes. Circumstances including trade relations will 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. Shares which the Board of Directors regards as having no significance will be sold on a timely basis.

With respect to the shares held as of December 31, 2025, the Board of Directors discussed “examination of whether to continue to hold shares as cross-shareholdings” and approved the holding of the shares at its meeting held on January 29, 2026.

In the fiscal year ended December 31, 2025, the Company reduced the holding of nine issues of shares, including four issues of shares sold entirely. We will decide to sell some issues of shares flexibly, keeping a close watch on the prices of the shares.

Exercise of voting rights attached to cross-shareholdings

CEO and CFO will make decisions individually with an emphasis on improving the corporate value of the cross-shareholding partners over the medium to long term. When making a judgement, special attention will be paid to whether the cross-shareholding partner has been tarnished by scandals or has committed an antisocial act. If the cross-shareholding partner were to be involved in such circumstances, the partner’s management improvement measures and audit reports shall be scrutinized.

Relationship between cross-shareholders

When a cross-shareholder indicates its intention to sell the Company’s shares, Daifuku shall not hinder the sale of the cross-held shares.

Cross-shareholdings on consolidated balance sheets

Basic policy for corporate governance and disclosure based on the Principles of Japan’s Corporate Governance Code

Daifuku Group Basic Policy for Corporate Governance (101 KB)
Disclosure Based on the Principles of Japan’s Corporate Governance Code (671 KB)

Reports

Corporate Governance Report (598 KB)
Shareholders Meeting
Daifuku Report
Securities Report

Related links

ESG Data
Stakeholder Engagement