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AVI launches campaign to push for governance reforms at Wacom

Asset Value Investors (AVI), manager of AVI Japan Opportunity Trust (AJOT) and AVI Global Trust (AGT), has stepped up pressure on one of its portfolio companies, Wacom Corporation (TSE: 6727), calling for sweeping changes to the firm’s governance and strategy. AVI has submitted a series of shareholder proposals ahead of Wacom’s Annual General Meeting in June and has launched a dedicated campaign website at www.DrawWacomsFuture.com.

The proposals are part of a wider effort by AVI to improve long-term corporate value at the Japanese digital pen and tablet manufacturer. Since initiating its investment in August 2021, AVI has engaged Wacom’s senior management in repeated dialogue, including in-person meetings and written communications, in an attempt to address concerns around the company’s underperformance – particularly in its Branded Business segment, which has accumulated losses exceeding ¥10bn since the fourth quarter of its 2021-22 financial year.

AVI, which is Wacom’s largest shareholder, through its holdings within funds such as AJOT and AGT, argues that Wacom has consistently fallen short of its mid-term management goals and has significantly lagged the broader TOPIX index. In response, it has submitted three shareholder proposals:

  • The formation of a Transformation Plan Supervisory Committee
  • The appointment of an independent director with a background in capital markets
  • Amendments to the Articles of Incorporation to bring Wacom’s policy on takeover approaches in line with Japan’s Ministry of Economy, Trade and Industry’s (METI) Guidelines for Corporate Takeovers

AVI says that these changes are designed to instil greater accountability and improve the company’s strategic execution. If a supervisory committee is implemented, AVI has indicated it would back Wacom’s efforts to refocus and reposition the business.

Kazunari Sakai, AVI Japan’s Head of Research, commented: “To improve alignment with investor expectations and shareholder interests, Wacom should go beyond the current Board’s monitoring role by appointing directors with capital market experience, establishing a supervisory committee, and amending the Articles of Incorporation to align with METI’s Guidelines for Corporate Takeovers.”

Sakai added that despite current difficulties in the branded business, AVI remains optimistic. “We are confident that through shortening the product development cycle for entry-level products and strengthening e-commerce channels, Wacom can further reinforce its position as the global leader.”

Wacom’s AGM will take place in June. Investors will be watching closely to see whether AVI’s proposals gain traction.

Matthew Read
Written By Matthew Read

Head of Production and Senior Research Analyst

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