Shareholder activism is catching on in Japan.
A record 14 shareholder proposals for higher returns will be made at annual general meetings this month, according to IR Japan, a research firm.
Five are from a single investor – The Children's Investment Fund of London – which will becoming back at Japan Tobacco on Tuesday with a similar set of resolutions to the ones rejected for the past two years. (Since then, though it denies any causation, JT has raised payouts). The rest are from individuals and domestic institutions.
As in Europe and the US, many of these will probably fail to win majority support, say analysts.But the fact they are being made at all is noteworthy. While investors in other developed markets routinely tangle with management teams over matters such as remuneration or succession, Japan's institutions tend to be a docile bunch.They rarely vote against company resolutions, let alone come up with their own.
However, under Prime Minister Shinzo Abe's plan to breathe new life into the world's second-biggest equity market, investors are expected to speak out, and often. A new seven-point Stewardship Code for institutions, modelled on the UK's, obliges asset managers to engage with management teams on matters of strategy and governance and to avoid casting votes like a "mechanical checklist."
More than 120 institutions have already signed up– many taking their cue from the Y129 trillion-in-assets Government Pension Investment Fund, which sees stewardship responsibilities as"important to improve the long-term risk-return profile" of stocks, according to Sadayuki Horie, deputy chairman of the GPIF's investment committee.
In a further sign of a warmer climate for activism, the GPIF in April added Taiyo Pacific, a Seattle-based "friendly activist," to its line-up of external managers.