Below are key takeaways from ISS’ recently released 2022 Japan Proxy Season Preview. The full report is available to institutional subscribers by logging into ProxyExchange then selecting the Governance Exchange and its Report Center tab and to corporate subscribers by logging into Governance Analytics then selecting the Governance Exchange and the Report Center tab.
KEY TAKEAWAYS:
- Peak meeting date: This year’s peak Japan meeting day is expected to be June 29, when 26 percent of June annual meetings are likely to be held, followed by June 24 (21 percent), June 28 (19 percent), and June 23 (13 percent).
- Board Independence: A marked uptick in board independence and female board representation is observed; a 13 percentage point jump in companies with at least a one-third independent board, and a 12-percentage point increase in boards with at least one female director for companies listed on TSE’s Prime (the former First) listing section, compared with the same time in 2021 March.
- Equity Compensation Plans: More equity compensation plans are expected to be seen on ballots this year. An increasing number of Japanese companies are now proposing performance-based and equity-based compensation to better align the interests of directors with those of shareholders, a trend partially stimulated by Japan’s Corporate Governance Code.
- Climate shareholder proposals: A number of climate-related shareholder proposals have been submitted. The proposals are intended to seek better disclosure concerning climate risk management information.
- ISS Policy Changes: Two policy changes were implemented from February 2022. One relates to board independence requirements for companies with the statutory auditor system. If at least one-third of the board members, after the shareholder meeting, will not be outside directors, ISS will recommend a vote against the company’s top executive. The other change relates to cross-shareholdings. If a company allocates a significant portion (20 percent or more) of its net assets to cross-shareholdings, ISS will recommend a vote against the company’s top executive.
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By: Japan Research Team
