ISS’ Proxy Voting Guidelines for Japan

Were are posting ISS' 2013 proxy voting guidelines to Japan to the Data Libarary, available at http://bdti.mastertree.jp/f/ec81ntbv. 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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