Daikin’s 89-year-old chairman is being questioned both inside and outside the company… Is the “4.3 billion yen in special achievement payments” justified? | FRIDAY DIGITAL

Daikin’s 89-year-old chairman is being questioned both inside and outside the company… Is the “4.3 billion yen in special achievement payments” justified?

Despite being a charismatic figure who has reigned at the top of management for 30 years...

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Chairman Inoue will step down at the general shareholders meeting, but will remain as honorary chairman and representative executive officer of the global group.

Noriyuki Inoue, 89, chairman of Daikin Industries, a major air conditioning manufacturer, will step down at the general shareholders meeting on June 27. At the same time, a huge “special merit payment” of 4.3 billion yen will be made, causing a stir.

Chairman Inoue is the “founder of Daikin” who has made great strides in the 30 years since he became president in 1994. Indeed, looking at sales alone, Daikin’s sales jumped from approximately 380 billion yen in FY1994 to approximately 4.4 trillion yen in FY2011. The company has become the world’s largest air conditioner manufacturer in terms of sales. The company’s management skills and achievements are worthy of praise.

In the “Notice of Convocation of the Ordinary General Meeting of Shareholders” published by the company to its shareholders, the reasons for the payment and amount of the special merit payment are stated as “implementation of reform after reform” and “outstanding management strategy. In July 2007, a special merit pay review committee consisting of outside directors was established, and the decision was made after nine deliberations so far, according to the company.

However, one employee laments, “I don’t know what to do about it. One employee, however, is not so sure.

The improvement in business performance over the past 30 years is not due to the efforts of Chairman Inoue alone, but also to the efforts of many retired directors and executives. Chairman Inoue was revered within the company as an “emperor” and a “charismatic figure,” so it is likely that there was some discernment on the part of those around him.

Yoshihiko Miyauchi, 88, who served as the top manager of Orix Corporation for 33 years, also attracted attention when he received a 4.4 billion yen bonus upon his retirement, but Miyauchi was one of the founding members.

In the first place, Daikin introduced a performance-based compensation system for directors and abolished the retirement bonus system for directors and corporate auditors in 2003. In other words, performance is reflected in compensation on a yearly basis, and it is highly questionable whether the huge amount of special merit pay is justified. Incidentally, Chairman Inoue received 456 million yen in compensation in the fiscal year ended March 2011.

A former employee of the company said, “Inoue’s management skills were praised.

A former employee of the company said, “There are many reports praising Mr. Inoue’s management skills, but it is not all good. For example, the problem of PFOA (a kind of organic fluorine compound) detected in the vicinity of the company’s Yodogawa Plant has not yet been resolved.

In 2011, Mr. Masanori Togawa, a close associate and head of the secretarial office, was promoted to president, and in 2004, his own eldest son was selected as the youngest full-time director. This personnel move was criticized as “privatization of the company by Mr. Inoue.

What was the basis for the 4.3 billion yen figure? When we asked the company about the basis for the 4.3 billion yen figure, they replied as follows.

I will not go into details, but the ‘Special Achievement Payment Review Committee’ has determined that it is appropriate to present Mr. Inoue with a special achievement payment in light of his achievement in significantly increasing the value of the company.

Mr. Inoue will remain with the company as honorary chairman after the shareholders’ meeting.

Daikin Industries’ headquarters building in Umeda, Osaka. Since November 2010, it has been moved to a building that houses the Hanshin Department Store.

From the July 5 and 12, 2024 issue of FRIDAY

  • Reporting and writing Hironori Jinno (Nonfiction writer) PHOTO The Asahi Shimbun (Chairman Inoue), Sadayasu Naito (company building)

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