Asset Value Investors Limited submitted eight shareholder proposals to NC Holdings. At the ordinary general meeting of shareholders on 29 June, three of these proposals passed while a further three achieved majority shareholder support.
Proposals that passed:
- A special resolution requiring over two-thirds of the vote, amending the articles of incorporation to give shareholders the authority to determine dividends at general meetings,
- A dividend of JPY 65 per share, equivalent to a 70% pay-out ratio, and
- A stock compensation plan for directors, including a stock plan for executive directors based on achieving a three-year total share price return of over 50% and an average three-year ROIC of over 10%.
Proposals which achieved majority shareholder support but did not pass:
- A special resolution to amend the articles of incorporation to increase the maximum number of directors allowed on the board from 12 to 13,
- A special resolution setting minimum requirements when adopting or triggering a poison pill, and
- A special resolution that requires prior approval by a general meeting of shareholders for a third-party allocation of shares.
AVI believes that the special resolution is one of only a handful of shareholder-proposed special resolutions to have ever passed in Japan and that AVI is one of only three shareholders who had their resolutions successfully passed despite opposition by the company this June AGM season. AVI questions whether the board’s opposition to these raises serious questions as to whether the current directors are acting in shareholders’ best interests.
AVI says that it views the approval of three shareholder proposals and the majority support for three more as a significant step forward in enhancing NCHD’s corporate value in the best interests of NCHD’s shareholders. It wants the board to abide by the spirit of the proposals that were backed by a majority of shareholders but did not muster enough votes to pass.
AJOT : AVI Japan makes progress with NC Holdings