Below are key takeaways from ISS’ recently released 2024 Proxy Season Preview – Japan. 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.
- Peak meeting date: This year’s peak Japan meeting day is expected to be June 27, when about a quarter of June annual meetings are likely to be held on a single day, followed by June 26, June 25, and June 21.
- Board Independence: The number of outside directors at Japanese companies had increased in recent years, but further increases are unlikely to be observed this year; most companies are now in compliance with the Corporate Governance Code requirements. As of March 2024, 84 percent of companies covered by ISS had a board composed of at least one third outsiders. In addition, at 24 percent of companies covered, at least half of the board members were independent outsiders (based on the TSE classification)
- Board Gender Diversity: Meanwhile, a continued uptick in female board representation is observed. As of March 2024, 71 percent of companies ISS covered had at least one female director (an increase from 68 percent a year earlier).
- 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.
- ISS Japan Policy Changes: Two policy changes were implemented for meetings after February 2024. In the first, the return on equity (or ROE) policy for Japanese companies, which had been suspended during the COVID-19 pandemic, was reinstituted. The second policy update is to make the poison pill policy more stringent by requiring a majority-independent board for companies seeking to introduce or renew a poison pill.
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By: Japan Research Team
