At Antonbrug
TOKYO (Reuters) – Shareholders of Japan’s largest companies are increasingly voting against management resolutions, data showed on Tuesday, spurred by guidance on effective corporate governance and capital allocation from Japanese regulators.
Shareholder resistance is now routinely a feature of Japan’s annual general meeting (AGM) season, proxy lawyer Georgeson said in an annual review of the meetings.
The share of contested resolutions – those that received 10% or more “against” votes from shareholders – rose to 13.1% of all resolutions submitted to shareholders at the annual general meetings of shareholders held by companies in the year to June 30, 2024.
The result has increased slightly compared to 12.8% in the 2023 AGM season and 11.8% in the 2022 season.
The Tokyo Stock Exchange’s push to get companies to draw up capital allocation plans, limit cross-shareholdings and improve price-to-book ratios has prompted investors to question management teams, said Georgeson CEO Cas Sydorowitz.
“It’s part of a policy reform agenda in Japan that is really starting to take hold and start to bear fruit,” Sydorowitz said in an interview.
By 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 advisors Institutional Shareholder Services and Glass Lewis have adopted stricter voting guidelines for Japan, closer to those of other countries.
The advisors advised significantly more ‘against’ board decisions in 2024 – an increase of 66% versus ISS and 17% versus Glass Lewis compared to the previous year.
Proxy advisors are becoming increasingly influential as foreign investors make up an increasing share of Japanese companies’ shareholders and rely on the advisors’ recommendations during a crowded two-week period of AGMs in Japan, Sydorowitz said.
The overview was jointly published by Mitsubishi UFJ (NYSE:) Trust and Banking Corp unit Japan Shareholder Services. Georgeson is owned by Computershare.