Sekisui House Shareholder Proposal by former CEO – stock price soared in anticipation of reforms
March 30, 2020
Weekly Economist Online
At the press conference of February 17, 2020 – Mr. Isami Wada, former Chairman & CEO (center)
Mr. Isami Wada, former Chairman of Sekisui House, as well as slate directors from U.S. funds, are working to increase the chance of winning at the general meeting of shareholders of April 23, 2020.
One of the focuses in the shareholder proposal made by Mr. Wada et al. is the improper transaction in 2017 of a piece of land in Gotanda, Tokyo. Sekisui House lost its land purchase money of 5.5 billion yen in a fraudulent transaction involving swindlers who acted like the land’s true owner.
On February 17, 2020 they held a press conference in Tokyo where they argued that Sekisui House’s current management, including Chairman Toshinori Abe and Vice Chairman Shiro Inagaki, are responsible for the loss and its subsequent cover-up of the incident details, and proposed dissident slate directors to enhance corporate value and governance, in addition to such planned initiatives as the unwinding of cross-shareholdings.
Sekisui House responded that “neither criminal investigations of incident of fraud nor subsequent criminal proceedings have detected any improper conduct, such as the connection between insiders of the Company and the criminal group.” Also Sekisui House commented that the shareholder proposal is just Mr. Wada’s personal demand saying that “there most likely is a private reason for the proposed shareholder, and is not intended to enhance the corporate value of the Company and the common interests of the shareholders.”
Funds made a purchase of additional Sekisui House shares
In the US and Europe, the stock price of a company that received a shareholder proposal tends to soar in anticipation of the possible growth of corporate value. In recent years a larger number of investors have demanded Japanese companies with a large amount of undistributed profits an increase in corporate value.
Mr. Masayuki Otani, head of research at Securities Japan, Inc., says “A growing number of investors are making a shareholder proposal thinking that Japanese companies are not using their assets effectively. Such moves are good for shareholders of traditional Japanese companies that are managing their businesses in an outdated manner.”
Favoring the shareholder proposal by Mr. Wada that could lead to enhanced governance at Sekisui House, some investors are buying Sekisui House stocks.
Among those investors is Nomura Group, and the Group that has Nomura Securities, Nomura Asset Management and Nomura International plc owned 5.62% of Sekisui House as of March 23, 2020, an increase from 5.05% in October 2019. Also the U.S. fund BlackRock became the third largest shareholder of Sekisui House this year.
Let’s see how Sekisui House will be dealing with those overseas funds going forward.
(Katsuyo Kuwako, Editorial Department)