ISS’ Proxy Voting Guidelines for Japan

Were are posting ISS' 2013 proxy voting guidelines to Japan to the Data Libarary, available at These contain their rule about independent directors, which seems to have had significant impact this year, and which is reproduced below:

ISS has two policies for director elections in Japan: one for companies with a statutory auditor board structure, and the other for companies with a U.S.-type three committee structure. Regardless of governance structure, Vote FOR the election of directors, except for:

• A top executive1 if the board after the shareholder meeting does not include at least one outsider, regardless of independence; or
• A top executive at a company that has a controlling shareholder, where the board after the shareholder meeting does not include at least two independent directors based on ISS independence criteria for Japan; or
• An outside director nominee who attended less than 75 percent of board meetings during the year under review2; or
• A top executive who is responsible for not implementing a shareholder proposal which has received a majority of votes cast3, or not putting a similar proposal on the ballot as a management proposal the following year (with a management recommendation of FOR), when that proposal is deemed to be in the interest of independent shareholder.

1 In most cases, the top executive will be the “shacho” (president). However, there are companies where the ultimate decisionmaking authority rests with the “kaicho” (executive chairman) or “daihyo torishimariyaku” (representative director). “

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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