Corporate Governance
- Basic stance
- Board of Directors
- Skill matrix
- Executive remuneration
- Evaluation of the Board of Directors’ effectiveness
- Advisory Committee
- Audit & Supervisory Board
- Other bodies and systems
- Cross-shareholding strategy
- Disclosures
Basic stance
Under the company creed, as an unchanging corporate stance, and the spirit of its management philosophy, which is based on changes in the social and business environment, the Daifuku Group will contribute to the development of society and the economy as a whole, continuously enhancing the effectiveness of corporate governance to achieve 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.
Daifuku Group Basic Policy for Corporate Governance (750 KB)
Corporate governance system
Diversity in the Board of Directors (ratio) | ||||
---|---|---|---|---|
June 2024 | Outside directors | Outside directors and outside members of the Audit & Supervisory Board | Female directors | Foreign national directors |
50% (5 out of 10) | 57% (8 out of 14) | 10% (1 out of 10) | 10% (1 out of 10) |
Reasons for adoption of the current corporate governance system
Daifuku Co., Ltd. is a company with an Audit & Supervisory Board. Under this basic structure, the Group has flexibly introduced and expanded systems to enhance management transparency and the management monitoring and supervision functions. We believe that the current corporate governance system is appropriate in terms of the workforce and business operations including scale of the Group and that we meet the expectations of shareholders, who entrust management to us.
Enhancement of the corporate governance system
Our approach | |
---|---|
2011 | Introduces a corporate officer system. |
2012 | An outside director elected (resulting in ten directors in total). |
2014 | Two outside directors elected (resulting in eleven directors in total). |
2015 | Conducts evaluation of Board of Directors’ effectiveness for the first time. |
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 | Establishes the Audit & Supervisory Board Office. |
2021 | Revises the Group’s management philosophy. |
2022 | Delists Contec Co., Ltd. due to making it a wholly owned subsidiary. |
2023 |
|
Board of Directors
Daifuku’s Board of Directors makes decisions on important matters stipulated in the Rules of the Board of Directors, such as the determination of management policies, management plans, and corporate governance system. The Board delegates matters other than these important matters to directors and corporate officers. The Board of Directors meetings are attended by all directors with a one-year term of office and all Audit & Supervisory Board members, with a senior managing officer, managing officers and an audit officer joining as observers. The president and CEO serves as Chair of the Board of Directors. The Company holds regular monthly meetings of the Board of Directors, with extraordinary meetings convened, as necessary.
Composition of the Board of Directors and attendance rate for the fiscal year ended March 31, 2024
Title | Name | Attendance rate (number of attendance/ times of meetings held) |
---|---|---|
Representative director President and CEO |
Hiroshi Geshiro | 100% (16/16 times) |
Directors | Seiji Sato | |
Hiroshi Nobuta | ||
Hideaki Takubo | 100% (11/11 times) | |
Shuichi Honda | 100% (5/5 times) | |
Toshiaki Hayashi | 100% (16/16 times) | |
Outside directors | Yoshiaki Ozawa | |
Mineo Sakai | ||
Kaku Kato | ||
Keiko Kaneko | ||
Gideon Franklin | 100% (11/11 times) | |
Audit & Supervisory Board member (full-time) | Tsukasa Saito | 100% (16/16 times) |
Audit & Supervisory Board members (outside) | Ryosuke Aihara | |
Tsukasa Miyajima | 93% (15/16 times) | |
Nobuo Wada | 100% (16/16 times) |
Notes:
- Mr. Shuichi Honda resigned from the office of director at the conclusion of the ordinary general meeting of shareholders held on June 23, 2023.
- Mr. Hideaki Takubo and Mr. Gideon Franklin assumed the office of director and the office of outside director, respectively, at the conclusion of the ordinary general meeting of shareholders held on June 23, 2023.
- Mr. Toshiaki Hayashi resigned from the office of director at the conclusion of the ordinary general meeting of shareholders held on June 21, 2024.
- Mr. Ryosuke Aihara resigned from the office of Audit & Supervisory Board Member at the conclusion of the ordinary general meeting of shareholders held on June 21, 2024.
Main agenda for Board of Directors meetings during the fiscal year ended March 31, 2024
- -Formulation of our long-term vision and the four-year business plan
- -Revision of Daifuku Environmental Vision 2050
- -Acquisition of treasury stock
- -Offering of bonds
- -Status of cross-shareholdings
- -Appointment of the Advisory Committee members
- -Status of activities of the Advisory Committee, etc.
- -Personnel changes concerning directors
- -Progress and results of the three- or four-year business plan
- -Promotion of sustainability initiatives
Skill matrix
The Company appoints directors by considering the optimal composition of the Board of Directors in terms of expertise, experience, diversity, etc., taking into account changes in the business environment and the management policies and business plans of the Group. Skill matrix showing the expertise and experience of each director is as follows.
Name | Expertise, experience | |||||||
---|---|---|---|---|---|---|---|---|
Corporate management | Technology | Finance, accounting | Legal affairs, risk management | Sales, marketing | Global | Environment, society, governance | Tenure | |
Hiroshi Geshiro | ✔ | ✔ | ✔ | ✔ | ✔ | 9 years | ||
Seiji Sato | ✔ | ✔ | ✔ | 9 years | ||||
Hiroshi Nobuta | ✔ | ✔ | ✔ | 3 years | ||||
Hideaki Takubo | ✔ | ✔ | ✔ | ✔ | ✔ | 1 year | ||
Tomoaki Terai | ✔ | ✔ | ✔ | ✔ | Newly elected | |||
Yoshiaki Ozawa | ✔ | ✔ | ✔ | 10 years | ||||
Mineo Sakai | ✔ | ✔ | ✔ | ✔ | 6 years | |||
Kaku Kato | ✔ | ✔ | ✔ | ✔ | 5 years | |||
Keiko Kaneko | ✔ | ✔ | ✔ | 5 years | ||||
Gideon Franklin | ✔ | ✔ | ✔ | ✔ | 1 year |
Note:
Up to five skills of individuals are marked with “✔”. The above list does not represent all of the knowledge, experience, and abilities of individuals.
Executive remuneration
The executive remuneration consists of basic remuneration (fixed remuneration), a bonus (short-term performance-linked remuneration that is fluctuated based on performance), and medium- to long-term performance-linked equity remuneration, Board Benefit Trust (BBT). To determine annual remuneration for directors, the total amount of remuneration for individual director is resolved at a Board of Directors meeting following verification by the Advisory Committee whether it is reasonable based on levels at other comparable companies and through deliberations and reporting by the Advisory Committee.
Revision of executive remuneration for the fiscal year ending December 31, 2024 onward
To determine executive remuneration based on a more transparent and fair process with the aim of achieving sustainable growth of the Company and enhancing corporate value over the medium to long term, the Company has revised the executive remuneration system for the fiscal year ending December 31, 2024 onward. A resolution to change the executive remuneration system was passed at a Board of Directors meeting held in February 2024, based on reporting from the Advisory Committee.
[Point 1]
Determination of the amount of remuneration to be made by the Board of Directors, which was previously delegated to the President and CEO (transparency in determination of remuneration)
Regarding the amount of remuneration for individual directors, the President and CEO had been delegated to determine the details of remuneration, etc. for individual directors in accordance with related internal rules. However, following the revision, the Board of Directors will determine the amount of remuneration for individual directors based on reporting by the Advisory Committee.
[Point 2]
Introduction of ESG indicators (taking both business and sustainability perspectives into account)
We have introduced ESG indicators with the aim of supporting further evolution of sustainability management. Specifically, in the calculation of bonus resources, we introduced coefficients linked with evaluation indicators related to the progress concerning (1) safety: zero serious accidents, and (2) environment: CO2 emissions reduction, in addition to consolidated net income. Moreover, as evaluation indicators for the BBT, we will introduce evaluation by external ESG rating agencies and the rate of CO2 emissions reduction, in addition to financial indicators.
[Point 3]
Emphasis on evaluation based on performance and contribution
To reflect performance and the degree of contribution of individual in the remuneration system more than in the case of the current system, the proportion of the performance-linked evaluation component has been increased from 80% for the basic component and 20% for the performance-linked evaluation component to 50% for the basic component and 50% for the performance-linked evaluation component.
Outline of executive remuneration for the fiscal year ending December 31, 2024
Basic remuneration | Performance-linked remuneration | |||
---|---|---|---|---|
Bonus | Non-monetary remuneration Board Benefit Trust (BBT) |
|||
Payment criteria | Positions and roles | Calculate bonus resources from consolidated net income and ESG indicators. Allocate 50% of the resources according to positions and roles. Then, allocate 30% for quantitative evaluation and 20% for qualitative evaluation in the area of responsibility. | Short-term assessment | Degree of achievement in each fiscal year targets (consolidated net income amount and margin) |
Medium- to long-term assessment | Degree of achievement of targets for three- or four-year business plan including consolidated net sales, consolidated operating income, ROE, and ESG indicators. | |||
Target recipients | All officers | Officers (excluding outside directors and Audit & Supervisory Board members) |
[Reference] Composition of remuneration for the fiscal year ended March 31, 2024
Malus clause
For the purpose of ensuring sound management, in accordance with relevant internal rules and regulations, the Company stipulates that in the event of certain circumstances concerning directors, such director may not acquire the right to receive benefits of BBT before the vesting of the right, upon resolution of the Board of Directors.
Evaluation of the Board of Directors’ effectiveness
The Company regularly examines the composition and operational status of the Board of Directors and evaluates its effectiveness. The Company works to continuously strengthen functions and improve effectiveness by addressing issues identified from the evaluation results.
In the effectiveness evaluation conducted in the fiscal year ended March 31, 2024 as well, the Company ensures objectivity and independence of the effectiveness evaluation by obtaining support from an external evaluation body at key points in the process, such as conducting questionnaires and interviews and analyzing survey results.
Method |
|
---|---|
Evaluation items |
|
Initiatives and evaluation for the fiscal year ended March 31, 2024
Recognition of issues in the results of the effectiveness evaluation for the fiscal year ended March 31, 2023 | Detailed initiatives for the fiscal year ended March 31, 2024 | Evaluation results of the questionnaire for the fiscal year ended March 31, 2024 |
---|---|---|
Ensuring diversity of core human resources | We have conducted improvement measures, such as expanding early female leaders development program eligibles, from assistant managers to candidates of assistant manager positions, to increase the number of female candidates for managerial positions. | The improvement was appreciated. |
Diversity in the composition of the Board of Directors | The Company appointed a foreign national director. | |
Group’s overall business portfolio | The Company set aside time to discuss at the Board of Directors meetings. | The majority of respondents evaluated the issue as being adequately overseen. On the other hand, some respondents indicated a request for continued consideration of this issue. |
To improve effectiveness in the future
Recognition of issues in the results of the effectiveness evaluation for the fiscal year ended March 31, 2024 | Future initiatives |
---|---|
Reviewing the Group’s overall business portfolio from the perspective of ensuring sustainable profitability and cost of capital | The Board of Directors will seek more sophisticated management system, in light of the issues that need to be discussed with greater awareness of cost of capital and return on capital. |
Training of successor candidates | To achieve medium- to long-term growth and sustainable enhancement of corporate value, we will continue to consider the target employees and contents of training system for successor candidates, in addition to enhancing training for officers based on their skills in light of the management strategy. |
Advisory Committee
The Company has established a voluntary Advisory Committee to strengthen the independence, objectivity, and accountability of the functions of the Board of Directors regarding the nomination, dismissal, and the remuneration of directors and corporate officers. The committee is chaired by an outside director and the majority of members are outside directors.
Composition of the Advisory Committee and attendance rate at the committee meetings for the fiscal year ended March 31, 2024
Title | Name | Attendance rate (number of attendance/ times of meetings held) |
---|---|---|
Outside directors | Yoshiaki Ozawa (Chair) | 100% (9/9 times) |
Mineo Sakai | ||
Kaku Kato | ||
Keiko Kaneko | ||
Gideon Franklin | 100% (7/7 times) | |
Representative director | Hiroshi Geshiro | 100% (9/9 times) |
Main agenda for the committee meetings during the fiscal year ended March 31, 2024
- Nomination
- -Personnel matters for the General Meeting of Shareholders
- -Personnel matters for the management
- -Corporate governance system, and other
- Remuneration
- -Executive remuneration system
- -Evaluation of performance bonuses for officers and Board Benefit Trust (BBT)
- -Verification of levels of executive remuneration, and other
Audit & Supervisory Board
With an awareness of their fiduciary responsibilities to shareholders and with a view to continuous corporate growth and medium- and long-term improvement in corporate value, Audit & Supervisory Board members and the Audit & Supervisory Board carry out auditing activities for fulfilling their duties, including auditing of directors’ execution of duties, auditing of the internal control system, and assessment of the appropriateness of auditing conducted by the accounting auditor, in accordance with the Rules of the Audit & Supervisory Board, the Standards for Company Auditor Audit, and the Standards on Audit Concerning the Internal Control System.
Composition of the Audit & Supervisory Board and attendance rate at Audit & Supervisory Board meetings for the fiscal year ended March 31, 2024
Title | Name | Attendance rate (number of attendance/ times of meetings held) |
---|---|---|
Audit & Supervisory Board member (full-time) | Tsukasa Saito | 100% (8/8 times) |
Audit & Supervisory Board members (outside) | Ryosuke Aihara | |
Tsukasa Miyajima | ||
Nobuo Wada |
Note:
Mr. Ryosuke Aihara resigned from the office of Audit & Supervisory Board Member at the conclusion of the ordinary general meeting of shareholders held on June 21, 2024.
Main agenda for Audit & Supervisory Board meetings during the fiscal year ended March 31, 2024
- Resolution
- -Audit plans
- -Reappointment of accounting auditors
- -Consent to audit compensation for accounting auditors
- -Audit reports by the Audit & Supervisory Board
- -Consent to proposals for election of Audit & Supervisory Board members
- -Partial amendments to the Rules of the Audit & Supervisory Board
- -Amendments to the standards for evaluation and appointment of accounting auditors
- -Types of non-assurance services subject to pre-approval to be contracted to accounting auditors, and other
- Reporting
- -Reports on the activities of the full-time Audit & Supervisory Board member and the Audit & Supervisory Board Office
- -Reports on the implementation of audits
- -Reports on the results of on-site audits of business units
- -Audit plans of the Audit Division, and other
- Deliberation and discussion
- -Drafting audit reports of Audit & Supervisory Board members and the Audit & Supervisory Board
- -Partial revision of the remuneration system for Audit & Supervisory Board members, and other
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.
Other bodies and systems
- Management Advisory Meeting
- Management Advisory Meeting is held to confer on important management matters. With all directors and Audit & Supervisory Board members in attendance, this meeting also seeks the opinions of related corporate officers, audit officers, executives, and external specialists on an as-needed basis. The Management Advisory Meeting is convened by the President and CEO as appropriate. In the fiscal year ended March 31, 2024, the Management Advisory Meeting met two times.
- Officers meeting
- The Company holds officers meetings to review and formulate the matters to be discussed by the Board of Directors as stipulated in the Rules of the Board of Directors and reports the matters stipulated in the Rules of the Officers Meeting. The officers meeting consists of all directors and all corporate officers. It is held with the attendance of Audit & Supervisory Board members and an audit officer. The meeting is held every month in conjunction with scheduled Board of Directors meetings.
- Corporate officer system
- The Company has introduced a corporate officer system for the purposes of the following:
- Accelerate decision-making on business execution through a reduction in the number of directors as well as further revitalizing the Board of Directors by promoting more rigorous deliberations.
- Engage in functional and efficient business operations by broadly promoting employees with knowledge of business operations to serve as corporate officers and execute business based on the authority bestowed upon them by the Board.
Cross-shareholding strategy
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 the 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.
In the fiscal year ended March 31, 2024, the Company reduced the holding of 12 issues of shares, including seven issues of shares sold entirely.
Exercise of voting rights attached to cross-shareholdings
We will make decisions individually with an emphasis on improving the corporate value of the cross-shareholding partners over the medium to long term. At the time of the assessment, 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 has been involved in such circumstances, its managerial approach to improvement 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.
Disclosures
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 (837 KB)
Reports
Corporate Governance Report (630 KB)
Shareholders Meeting
Daifuku Report
Securities Report