AGM for Keihanshin (2020)
Strategic Capital attended the AGM and expressed our opinions. Please refer here for more details (Japanese only).
The following is a summary of our key points made at the meeting.
●For two and a half years, we have worked to increase shareholder value. It was not until we made a shareholder proposal that we understood why company management has not acted. That is because company directors are aiming to preserve their own position by creating stable shareholders through cross-shareholdings, despite the practice of owning numerous cross-shareholdings becoming increasingly rare. Management is using the assets entrusted by the shareholders to hold cross-shareholdings so they can preserve each other’s positions. Should company assets be used for such a purpose? .
●Many from the management team are Sumitomo Mitsui Financial Group (SMFG) alumni, and SMFG is one on the world’s premier financial institutions.（Omitted）Although we wonder if this applies to the SMFG alumni managing this company. (Omitted）Company management agreed that it would not be out of the question for a hostile takeover bid from a third party, similar to Unizo holdings, to happen at any time. If you think it is not out of the question for this to happen at any time, then isn’t being prepared for it the role of management? Is it the right strategy to preserve yourself using cross-shareholdings? From a medium- to long-term perspective, you will not be able to rely on stable shareholders and not even in the medium- to long-term, there could be a sudden TOB on the company. Being prepared for this is the role of management.
●We believe that one of the reasons the individual shareholding ratio is decreasing is the shareholder incentive program. President Minami told me directly the purpose of the program was “to attract retail investors and create long-term relationships with shareholders”. The stated purpose itself is dishonest. In reality, we believe that the shareholder incentive program is distributed at the company’s expense to attract stable shareholders that unconditionally support the directors, or in other words, to preserve their position as directors. The system does not contribute to enhance enterprise value, but only wastes company assets.