Governance Screening Tool for ALL Companies in Japan – Just ONE of GoToData Dashboard’s Features!

GoToData Dashboard’s screening tool shows us that only 75% (1464) of all TSE1 firms have nom + com committees, but only 842 of them are chaired by outside directors. At only 51 of those firms does an outside director serve as chair of the board, and 44 firms in that group have at least one female board member. Below, read more of the interesting results from this demonstration of the screening tool.

The General Counsel as Board Member – Advice from Larry Bates, Former General Counsel at Panasonic, Lixil, and GE Japan

 

In Japan, traditionally there was no role of “General Counsel” (GC), the senior in-house counsel/lawyer, who sometimes sits on the board. Instead, until recently the standard model was that companies had a “Legal Department” led by a general manager who normally was not a licensed lawyer, and therefore had less to “lose” if he failed to give proper advice or transgressed ethical and other rules set by the Bar Association. However, as Japanese companies have expanded and globalized, more of them are realizing that it is essential to have an actual licensed attorney serve as the “Chief Legal Officer” (CLO), serving a broader, more senior, and influential role.

In this webinar, BDTI’s Nicholas Benes will interview the well-known Larry Bates, who recently stepped down from his role as Panasonic’s first General Counsel and will retire as a director in June of this year. During the past 30 years, Larry has served as General Counsel for 30 years at five different companies, all of which operated in a global legal context. To provide actionable advice and perspectives to Japanese companies, the interview will focus on key issues such as: (a) what should be the GC’s role and mission, and how does the concept of “GC” differ from the traditional Japanese model? (b) should that role include “corporate secretary” duties, or should the two roles be kept separate? (c) what other functions does it overlap with, and how should the GC relate to them? (d) what are the pros and cons of having the GC sit on the board? What is his or her relationship with the board and other executives? (e) what legal or compliance matters do Japanese companies need to pay more attention to? (f) what is it like to participate in board decision-making itself, not only as GC but also as a foreigner, on a Japanese board? What can be done by Japanese companies to benefit more from diversity? – to name just a few.

After the interview, there will be a panel discussion including other experienced legal advisors and independent directors at global companies. We will be joined by Chika Hirata, currently Regional Head of Ethics and Compliance at Takeda, and the former CLO and Corporate Secretary at MetLife Japan; and by Yumiko Ito of Ito Law Office, who also serves as an independent director for Kobe Steel, Ltd. and as an independent corporate auditor for Santen Pharmaceutical, Co., Ltd.

This event will be held in English.

Governance Around the World: Japan (Video of Webinar)

In this webinar hosted by the Good Governance Academy of South Africa, the institutional characteristics of corporate governance in Japan were compared with other countries and the progress of the Japanese corporate governance reform since 2013 was highlighted. In particular, the changes that have occurred in Japanese companies and capital markets, as a result of recent reforms in corporate governance, were discussed, including by Genta Ando of METI, together with how these changes have been perceived in Japanese society. Finally, the actual state of corporate governance in Japan was reviewed considering Japanese company corporate disclosures, with commentary by Professor Mervyn King.

The Other Side of the Coin – Changes in Japanese Equity Price Formation From 2000-2021

by David Snoddy, CEO of Nezu Asia
SUMMARY

The nature of Japan’s relationship with equity market capitalism changed significantly from the first decade to the second of the 21st century. The first decade, particularly after the resignation of PM Koizumi in 2006, was often characterized by open conflict, with the most obvious examples being the arrest and conviction of shareholder activists Horie and Murakami, and the legal and regulatory attacks on both the consumer finance and leveraged real estate businesses (among others). However, approximately around 2011, the attitude of both government and the public morphed into something more resembling symbiosis than conflict. In the third decade of this century the symbiosis mode seems still to be ascendant.

Many of the top-down aspects of this shift have been well documented and discussed both in Japan and in the West – from the 2015 Corporate Code, to the 2014 Fiduciary Code and the emerging catalysts created by the rule set for Tokyo’s new “Prime” market. From the perspective of governance per se, there have been some concrete steps “backwards” (with the Toshiba drama a prime example). However, the cumulative effect of the change in the regulatory suasion regime in Japan is such that it is difficult to find equity market participants who believe that the governance environment in 2021, on average, is not noticeably more shareholder-friendly than it was 10 years ago.

Over the same period there has also been a dramatic shift in trends in Japanese equity price formation. This is not well documented or understood. But it is in fact the micro expression of the same impulses which are driving the “macro” changes in the regulatory regime. Since 2011, there has been a marked change in how the market “votes with its feet” – rewarding companies who conform to the new desired profile, and punishing those who don’t. Specifically, capital efficiency and, to a slightly lesser extent, revenue growth, have captured outsized returns.

The top-down changes in the regulatory regime are on one side of the coin. The bottom-up changes in price formation are the other side of the same coin.

The socio-economic function of equity capitalism in Japan is somewhat uncomfortably positioned between two massive sources of pressure. On the one hand, the aging of Japan’s society is slowly turning active employees into pensioners who, either directly or indirectly, depend on financial income to maintain their living standards. This economic pressure provides the core motivation for the changes in Japan’s approach to equity capitalism – both from the top and the bottom. One the other hand, there is a near-consensus social desire to protect and maintain the lifetime employment system, albeit only for a subset of employees. Predictably, these two pressures are often in conflict, which accounts for some of the peculiarities of “equity capitalism with Japanese characteristics.”

The social commitment to maintain the lifetime employment system predates all of the data to be presented here. The demographic challenges posed by the aging of society have been building for a generation or so, but it was only after 2011 that they resulted in a shift towards a noticeably more cooperative approach to equity markets.

Managing Human Resources in the Age of VUCA and Diversity — Advice from Levent Arabaci, Former CTRO at Hitachi

Japan has created a council to consider a “new form of capitalism”, stating that it aims to lead in the areas of “sustainability and human capital”. At the same time, the corporate governance code states that “in light of the importance of human resource strategies …companies should present their policies for human resource development and the internal environment development to ensure diversity.” Abroad, foreign companies continue to compete globally based on constantly refining their systems for managing HR, attracting and developing talent, and drawing on diversity as a source of competitive advantage.

Here in Japan, Hitachi has been a leader in this area under the leadership of the late CEO Hiroaki Nakanishi and Levent Arabaci, who until recently served as Chief Transformation Officer (CTRO) for Global Operations, and previously was the EVP of Human Resources starting in 2012.

In this webinar, Mr. Arabaci will describe the range of modern HR practices that Hitachi has put in place during the past 10 years, spanning areas such as talent mapping, career planning and development, performance evaluations, practices for promotions, and increases in diversity. BDTI Representative Director Nicholas Benes will interview Mr. Arabaci to identify the biggest challenges Hitachi has faced, and to reveal his concrete advice as to how other Japanese companies can overcome similar challenges.

Next, we will be joined by Takeo Yamaguchi (ex-Hitachi) and Christiane Iwanoff of Olympus, two persons with extensive experience at HR management. The panel participants will share their experiences and perspectives, will consider additional issues that have arisen in recent years, such as the impact of WFH, addressing work-life balance, and building more diverse, innovative organizations.

Date:         June 1, 2022(Wed.)  12:00-14:30

Location:         Zoom Web Conference

Charge:       Free

BDTI FY2021 Update to Supporters

The 2021 fiscal year was very difficult for BDTI, but it was also very fruitful. Our activities not only increased in terms of frequency and numbers, but also breadth as our organization rose to the challenge!

Activities and Milestones

Training Activities

  •  BDTI trained 342 persons in director training programs, broken down as follows:
    ▸ 122 in our three programs to which anyone can apply (13 programs)
    ◦ 32 in our new “advanced” course, focusing on the role of outside directors
    ◦ 16 in a joint course that included a section on diversity management
    ▸ 169 were trained in programs that were customized for specific corporations
    ◦ 64 of these were in programs where executives at subsidiaries received training
    ▸ 32% of the participants in our non-corporate director training programs were women, more than four times the average % of female directors on Japanese boards. This figure will likely increase in FY2022 because of a generous sponsored program to fund “training scholarships” for women
  •  608 persons attended our seven BDTI webinars, in which leading experts focused on these topics:
    ▸ “Understanding D&O insurance”
    ▸ “Engagement by investors – recent techniques”
    ▸ “Collective engagement in Japan: issues and obstacles”
    ▸ “ESG management” and “ESG disclosure”
    ▸ “Effective dialogue with investors, and the use of analyses and letters”
    ▸“The market for corporate control, and takeover defenses”
    ▸ “Factors affecting the selection of the legal form of governance” (from among the three types)
  • Upcoming webinars include an update on the ISSB’s direction, and global HR management.
  • At least 3,000 persons either received (or had access to) BDTI’s four e-Learning modules, including two megabanks and multiple corporate groups using our “unrestricted use” package

“Missionary Work” – Updating Institutional Investors

  •  I gave 14 speeches to different groups, comprising both Japanese and foreign institutional investors groups, adding up to a total “audience” of approximately 1,620 persons

Consulting and Data Activities – Now Starting to Contribute to BDTI’ s Long-term Sustainability

  • BDTI conducted consulting assignments for, or sold data to, 29 counterparties
  • Sold GoToData Dashboard service (demo it here: https://gotodata.jp/demo/home.php )
  • Sold direct access to BDTI’s detailed database with unique data and text to major institutions

“Oasis Announces “Women’s Director Training Scholarship” Initiative for International Women’s Day in Cooperation with BDTI of Japan” (Press Release)

(Text of the Press Release)

Investment firm Oasis to sponsor board director training courses through The Board Director Training Institute of Japan for all qualified women who enroll in March.

March 8, 2022, TOKYO – In honor of International Women’s Day, Oasis Management Company Ltd. (“Oasis”) and the Board Director Training Institute of Japan (“BDTI”) have announced a new month-long initiative to sponsor board director training courses for women.

Throughout the month of March 2022, Oasis will pay all costs for qualified women who enroll to take any of BDTI’s director training courses as described below. These Japanese and English-language training programs have been designed by leading experts in Japan to prepare candidates to serve as directors or executive officers in Japan.

The goal of the initiative is to equip highly qualified women leaders with the skills and training needed to succeed as board directors, and to proactively address the imbalance in board gender diversity in Japan by expanding the pipeline of board-ready women director candidates.

“Improving gender diversity on boards in Japan by adding qualified female directors is something we are focused on and believe will improve governance and competitiveness at Japanese companies,” Seth Fischer, the Founder & Chief Investment Officer of Oasis said. “We strongly encourage all women who are interested to take advantage of this opportunity to access BDTI’s excellent director education programs.”

“Capable, trained female directors bring significant benefits to Japanese boards and companies. We applaud Oasis’s leadership,” Nicholas Benes, BDTI Representative Director, said.

For further information, please contact BDTI at info@bdti.or.jp or 81-3-6432-2337.

BDTI Partner Fusion Systems: SDGs Through Mobility and Cycling

BDTI’s partner Fusion Systems: “As part of their collection of SDG initiatives, Fusion sponsors a cycle road race team called ‘Palatium Tokyo Fusion Systems’….Fusion believes mobility is an essential element of development strategies that aim to achieve SDGs. Meeting the needs of people who cycle continues to be a critical part of the mobility solution […]

2/7 “Director Boot Camp” Held by Zoom! Next Courses: 4/18!

On February 7th, BDTI held its English Director Boot Camp via teleconference. The day-long intensive course was attended by 10 highly-experienced and highly interactive participants. The participants heard lectures about corporate governance by Nicholas Benes along with a guest lecture by Andrew Silberman of AMT, and exchanged experiences and opinions. Even during a pandemic, training continued smoothly, with all participants chiming in with insightful comments and questions.

We are planning to hold the next course on April 18(Mon)2022. Sign up early! Please see a description of our director training course here or click the button below for further information.

11/18 “Director Boot Camp” Held by Zoom! Next Courses: 2022.2.7!


 

On July 13th, still in the midst of the pandemic, BDTI held its English Director Boot Camp via teleconference. The day-long intensive course was attended by 6 highly-experienced and highly interactive participants. The participants heard lectures about corporate governance by Nicholas Benes along with a guest lecture by Andrew Silberman of AMT, and exchanged experiences and opinions. Even during a pandemic, training continued smoothly, with all participants chiming in with insightful comments and questions.

We are planning to hold the next course on February 7(Mon)2022. Sign up early! Please see a description of our director training course here or click the button below for further information.