(#゜Д゜)ノ英字新聞
'Silent' shareholders find voice with management
This year's shareholders meeting season reached its climax Friday, with more than 1,300 listed companies holding meetings following the end of their fiscal years in March.
Coming under shareholder scrutiny typically places a heavy burden on management.
But this year's season also saw the unusual sight of major shareholders, in some cases represented by investment funds, clashing with firms over shake-ups of top management positions, among other issues.
Although demands from these funds were mostly rejected, the experience likely provided some important lessons for management.
The shareholders meeting of Aderans Holdings Co., the country's largest wig maker, symbolized the mood this year.
Reappointment of the firm's top management, including its president, was rejected because of opposition from U.S. hedge fund Steel Partners. The "Aderans shock" came after individual investors, frustrated with the company's poor performance, sided with the fund as it pressed for an overhaul of the company's leadership.
The case heralded a new era in which top management can be given its marching orders if shareholders decide it is not doing an effective job.
Winds of change
Although both the British-based The Children's Investment Fund's attempt to push out the president of Electric Power Development Co. and the U.S. fund Southeastern Asset Management's opposition to reappointing the president of Nipponkoa Insurance Co. ended in failure, the managements of both firms struggled to secure shareholder support.
This suggests that it is not just active shareholders, but also individual investors, once considered "silent shareholders," who are frustrated with plummeting stock prices and are making life harder for management.
As the ratio of foreign shareholders increases, domestic and overseas shareholders alike are becoming more demanding toward companies. With this in mind, companies should realize the era of easily obtaining shareholder approval for their proposals is coming to an end.
Defenses could hit investment
Defense measures against takeovers prepared by more than 200 companies at their respective shareholders meeting this year apparently will need reviewing.
Last year, Bull-Dog Sauce Co. blocked a takeover bid by Steel Partners by invoking an antitakeover defense and spending huge sums of money. This prompted other companies to introduce their own defense measures.
However, the Economy, Trade and Industry Ministry, which is concerned over the casual introduction and invocation of such schemes, has warned against excessive measures that could be interpreted as management simply trying to save its own skin, or technical measures intended to buy off opposition.
By engaging in such actions, and by making Japanese firms too insular, domestic companies could adversely affect government efforts to promote foreign investment in the country. Managements must therefore be careful.
Earlier this year, Shiseido Co. and other major companies abolished their antitakeover defense measures, with the cosmetics maker explaining that "enhancing competitiveness and growth potential is the best defense measure."
This statement should be instructive and raises the question of whether this kind of approach will become widespread.
The issue of corporate governance should once again come under the microscope.
