[Denso] Revision of Executive Compensation System and Introduction of Equity Compensation | May 2026

Details of the revision of the executive compensation system

Denso has resolved to revise its executive compensation system at the Board of Directors meeting on May 22, 2026, and is scheduled to submit it for approval at the General Meeting of Shareholders on June 18, 2026. The purpose of the revision is to promote the achievement of the mid-term management plan 'CORE 2030' and to ensure sustainable growth and value enhancement through value sharing with shareholders. A new performance-linked equity compensation system will be introduced, replacing the conventional restricted stock delivered through trusts, providing restricted stock during the term of office until retirement. This aims to strengthen incentives for directors and improve governance.

Overview of the system and future outlook

The revised compensation system consists of fixed compensation, bonuses, and stock-based compensation, with a particular review of performance evaluation indicators to reflect both short-term and medium- to long-term perspectives. Specifically, bonuses will be evaluated based on consolidated operating income and ROIC, while stock compensation will focus on ROE, total shareholder return, employee engagement, and sustainability assessments. A clawback clause is also introduced, allowing the company to recover compensation in cases of financial statement revisions, misconduct, or compliance violations. These measures aim to enhance transparency and accountability in management and to increase corporate value.