Below are key takeaways from ISS’ recently released 2022 Japan Proxy Season Review. 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.
- Board independence improves: With the April launch of the Prime Market of the Tokyo Stock Exchange, which requires companies to fulfill requirements under the Japan Corporate Governance Code, companies have increased board independence. A minimum one-third independent board, based on the independence criteria set out by the exchange, is now required. As of June 2022, 82.3 percent of boards have at least one-third of board members as outsiders, as compared to 73.3 percent in 2021.
- The number of female board directors is increasing: 63.4 percent of Japanese boards now have at least one female director, as of June 2022, up from 52.7 percent in 2021. However, the increase is explained mostly by an increase of female outside directors.
- Shareholder proposals surge: The number of meetings where shareholder proposals were voted was 88 through June 2022, which is a record high, as compared to 59 meetings (as of June 2021). In addition, in an unheard of move in Japan, at Fujitec, a vote no campaign was conducted in June, resulting in a victory for the campaigning shareholder.
- Climate change proposals continue to be on ballot: As in 2020 and 2021, climate proposals seeking better disclosure concerning the company’s environmental policy and business plans toward decarbonization were on ballot at seven companies: Sumitomo Mitsui Financial Group, Mitsubishi Corp., Tokyo Electric Power Co. Holdings, Chubu Electric Power, Electric Power Development, Kansai Electric Power, and SK Kaken.
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By: Japan Research Team