Japan Inc's shareholders increasingly challenge management
By Anton Bridge
TOKYO, Oct 15 (Reuters) -Shareholders of Japan's largest companies are increasingly voting against management resolutions, data showed on Tuesday, spurred on by guidance on effective corporate governance and capital allocation set out by Japanese regulators.
Shareholder resistance is now routinely a feature of Japan's annual general meeting (AGM) season, proxy solicitor Georgeson said in an annual review of the meetings.
The proportion of contested resolutions — those receiving 10% or more "against" shareholder votes — rose to 13.1% of all resolutions put to shareholders at AGMs held by Nikkei 225 companies in the year to 30 June 2024.
The result is up slightly from 12.8% in the 2023 AGM season and 11.8% in the 2022 season.
The Tokyo Stock Exchange's push to get companies to outline capital allocation plans, limit cross shareholdings and improve price-to-book ratios has spurred investors to question management teams seen falling short, said Georgeson CEO Cas Sydorowitz.
"It's part of a policy reform agenda in Japan that is actually starting to really take hold and bear some fruit," Sydorowitz said in an interview.
As of the end of August, 79% of companies listed on the Prime market had disclosed capital allocation plans, as recommended by the exchange, up from 40% at the end of December 2023.
At the same time, proxy advisers Institutional Shareholder Services and Glass Lewis have adopted more stringent voting guidelines for Japan, closer in line to those of other countries.
The advisers recommended significantly more "against" Board resolutions in 2024 – an increase of 66% from ISS and 17% from Glass Lewis compared with the previous year.
Proxy advisers are becoming more influential, as foreign investors make up a growing share of Japanese firms' shareholders and depend on the advisers' recommendations during a crammed two-week period of AGMs in Japan, Sydorowitz said.
The review was jointly published by Mitsubishi UFJ Trust and Banking Corp 8306.T unit Japan Shareholder Services. Georgeson is owned by Computershare CPU.AX.
Reporting by Anton Bridge; additional reporting by Makiko Yamazaki; Editing by Sonali Paul
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
