Author: Admin

Memo to Shareholders of Kirin HD, from a Director Candidate

2020-03-15 posted by

Independent Franchise Partners (IFP) has submitted a shareholder proposal nominating Kanako Kikuchi (an experienced global pharmaceutical executive) and myself as independent directors. Glass, Lewis supports electing both of us, but it seems that ISS has “split the baby” and only supports me. If investors could vote for Ms. Kikuchi as well, it would greatly help ensure that the board makes a fully informed, objective and independent assessment of the strategy on an ongoing basis.

Both of us have no past relations with IFP, and take an approach that is completely agnostic and independent of IFP’s dividend proposal. We both believe that if shareholders do not opt for that proposal, – or in any case – it is most prudent to withhold any decisions about the strategy until such time as when we are on the board and can ask questions and are privy to all internal analysis and confidential information. Therefore, we would both join the board with no pre-decision(s) made before knowing all the facts. This is the only logical position to take as a truly independent director. I have informed IFP in no uncertain terms that my philosophy and legal duty is to answer to all shareholders, and that I may well not agree with positions that IFP has taken or may take in the future. IFP has no problem with this.

Many investors may not realize that unless Ms. Kikuchi is elected, there will be no one with global biopharma experience on this board just at the time when that skill set is most needed. Given the company’s proclaimed strategy to “bridge” into health science products (which could be a good one for all I know), this is not wise and is of great concern to me.

Read More

METRICAL: February prices fell sharply due to concerns about the spread of Coronavirus. CG Top20 stock outperforms last month, keeping pace with Topix and JPX400

2020-03-03 posted by

In February 2020, prices fell sharply in the world’s major stock markets by the end of the month, fearing that the spread of the coronavirus could spread to various parts of the world. Both Topix and JPX400 stock indices have fallen sharply to -0.59% and -0.57% respectively in the month of February. The Top20 CG rating score was -0.38%, outperforming the previous month, keeping the decline rate lower than both major stock indices. The stock prices of the 10 companies with the top 10 CG rating scores fell even less, at -0.34%.

Read More

BDTI/METRICAL Joint Research Update: “CG Practice and Value Creation Linkage”-January 2020-

2020-02-18 posted by

Topics

  • 50%
    INEDs increased 1 company (Yamada Consulting [4792]) to 85 (86 companies
    including Toshiba) from the previous month.
  • A
    significant positive correlation was found between board practices and value
    creation (ROE, ROA, Tobin’s q) in the following

(Positive
correlation with actual ROE)

  • Ratio of female directors and
    ROE results
  • Incentive (compensation) plan
    factors and ROE achievements

Read More

METRICAL:January Market Indices and CG Top 20 stocks edged lower amid concern about spread of Coronavirus infection after risk-on rally in the 1H of the month.

2020-02-04 posted by

Stock prices climbed in the 1H of the month on risk-on rally buoyed by hitting historical high of US market, but concern about negative impact on global economy led by coronavirus infection put downward pressure on the stocks toward the month end. TOPIX and JPX400 market indices lost -0.11% and -0.09% respectively for the month. CG Top 20 stocks soft -0.07% but outperformed against the both indices for the same period.

Read More

METRICAL:How much do companies retire shares?

2020-02-04 posted by

We more often see the company’s posting about share repurchase lately. However, fewer companies retired the treasury shares in the past. How much companies cancel the shares? The following table shows that comparison of about the data of 1,800 Japanese companies between March 2018 and January 2020.

Read More

A Guide to Understanding Carlos Ghosn’s “Not Guilty” Plea

2020-01-28 posted by

by Sachiko Ichikawa
Comment by Nicholas Benes

Carlos Ghosn held a press conference on January 8, 2020 to present his “not guilty arguments” regarding the alleged crime of making, or not preventing, misrepresentations in Nissan’s Security Reports. He had already disclosed the testimony he made at the Japanese court which was considering his bail in 2019. So this was the second time that he has defended himself in public.

Mr. Ghosn spent more than one hour for his presentation, and even showed many slides and materials, but his logic for insisting on his innocence was not easy to understand. To me, his 2019 testimony in court was better than his 2020 televised presentation.  In an attempt to connect the dots, this article will explain my own interpretation of what Mr. Ghosn really wanted to say.

Read More

CITINDEX 11 : “Our Opinion on Toshiba Machine’s Implementation of Buyout Defense Mechanisms that Do Not Take into Account Shareholder Opinions”

2020-01-22 posted by

Conclusion paragraph: “We believe that Toshiba Machine’s implementation of its New Buyout Defense Mechanism that does not take into account (but rather opposes) shareholder opinions hinders the development of corporate governance in Japan, which has been built on the efforts of various parties including governmental agencies and self-regulation organizations such as the Ministry of Economy, […]

Read More

Correlation and Causation: Good Governance Practices and Firm Performance in Japan

2020-01-20 posted by

On December 11, 2019, I gave a lecture on BDTI’s analysis about corporate governance practices and and firm performance in Japan. Since then we have added indicators of statistical significance to our materials. To view the entire presentation as translated into English, click here: Presentation to Securities Analyst Association 2019.12.11. Those who read Japanese can read the full speech here, and can download the Japanese version of the presentation materials.

Our methodology is shown on page 23 . Our analysis suggests that the adoption of the following practices leads is followed by (appears to cause) improvements in ROA compared to the average for a firm’s industry over the next two years. Please see the charts on the left side of each page:

  • Adding an nomination committee of some sort (p. 27)
  • Appointing an outside director as the chair of that committee (p. 28)
  • The combination of nomination committee with a board composition with >33% independent directors (p. 30)
  • Adopting a performance-linked compensation plan for executives (p. 29)

Various other factors that appear to correlate with superior performance, are shown on page 22, and page 34. We will explore the direction of causation with some of these later.

Read More

Great Analysis of the Larry Fink/BlackRock Letter

2020-01-16 posted by

“Today, after more than a year of increasing pressure from climate activists, investors, legislators, and thought leaders, BlackRock CEO Larry Fink, in his highly-anticipated annual letter to CEOs and to clients, announced a sweeping new set of policies which aim to put climate change and sustainability at the center of BlackRock’s business model. BlackRock is the world’s largest asset manager with almost $7 trillion in assets under management as of Q3 2019. …..The announcement is a major shift for BlackRock, which previously had failed to take meaningful action on climate, and is a very important step in the right direction as the world faces increasing risk from climate change. Massive capital shifts away from fossil fuels and deforestation-risk commodities are necessary to mitigate the worst of the climate crisis and set the world on a path toward sustainability.

Read More