ANALYSIS: Activists target Japanese companies after governance change
It is not surprising that ExxonMobil Corp., valued at nearly a quarter of a trillion dollars, tops the list of the largest companies targeted by activist investors in the second quarter of the year. In June, following a countryside through Engine n ° 1, a small activist hedge fund focused on climate and environmental issues, the shareholders of ExxonMobil elected three dissenting directors to the company’s board of directors. What surprises is the presence of two Japanese firms, Seven & i Holdings Co. (the Japanese parent company of the 7-Eleven store chain) and the electronics giant Toshiba Corp. on that same list.
In previous years, militant campaigns were not a major concern for Japanese issuers as the country’s corporate governance structures isolated boards of directors and management of external challenges. In 2018, however, the Japanese authorities issued a revised Corporate Governance Code. the revised code calls for greater board accountability and management oversight, and states that “companies should take appropriate measures to fully guarantee shareholder rights and develop an environment in which shareholders can exercise their rights in an appropriate and efficient manner “.
Based in the United States ValueAct Capital management took a significant stake in Seven & i Holdings Co. in May. ValueAct may seek to restructure to focus on the core business of the company’s convenience stores.
Toshiba, long one of the main Japanese brands, has been assail through financial losses and management scandals. Singapore based hedge fund Effissimo Capital Management Pte. asked a probe on alleged irregularities related to the company’s 2020 annual general meeting, including the company’s alleged collusion with government officials to influence board elections. Shareholders ousted board chairman Osamu Nagayama in June.
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