Independent Proxy Advisors ISS & Glass Lewis Back Oasis Proposals for Kumagai Gumi AGM
June 21 2024 - 1:52AM
Business Wire
More information available at
www.KumagaiCorpGov.com
Oasis Management Company Ltd. (“Oasis”) is the manager to funds
that beneficially own over 10% of Japanese construction company
Kumagai Gumi Co., Ltd. (1861 JT) (“Kumagai Gumi”, “Kumagai” or the
“Company”). Oasis has adopted the Japan FSA’s “Principles of
Responsible Institutional Investors” (a/k/a the Japan Stewardship
Code) and in line with those principles, Oasis monitors and engages
with its investee companies.
Oasis welcomes the recently published research report from
leading independent proxy advisory firm, Glass Lewis, which
recommends that Kumagai Gumi shareholders vote AGAINST the
appointment of Chairman Yasunori Sakurano.
Oasis also welcomes the endorsement from another independent
proxy advisory firm, Institutional Shareholder Services Inc.
(“ISS”), which recommends that shareholders vote AGAINST the
appointment of Kumagai incumbent directors Shigeru Okada and
Tatsuro Sato, and FOR the JPY160 per share dividend proposed by
Oasis.
Key statements by Glass Lewis in its voting recommendation
include:
- “[I]nvestors have adequate cause to signal
dissatisfaction with the status quo, and consider more
pointedly direct rejection of Mr. Sakurano's candidacy…
to represent the most suitable means of expressing that
dissatisfaction.”
- “Oasis continues to submit compelling arguments related to,
among other things, significant and protracted declines
in Kumagai’s core return measures (ROE, ROA and ROIC) across Mr.
Sakurano’s prior executive tenure, the Company’s fairly weak
margins relative to peers, substantial and protracted misses
on stated operational targets, material revisions to
fundamental goals (notably a markedly lengthy extension of
Kumagai’s long-stranding JPY50 billion ordinary income objective)
and planned investments in what appear to be low yield,
peripheral business.”
- “[T]here remains cause for investors to hold Mr. Sakurano
– as current board chair and the Company’s prior president and
CEO through March 31, 2024 – accountable.”
Key statements by ISS in its voting recommendation include:
- “A history of missed performance targets calls into question
management’s ability to stabilize and turn around the core
operations, as well as the board’s oversight.”
- Oasis’s “campaign has raised significant concerns about
operational issues, poor capital allocation practices,
and a capital alliance that does not appear to deliver tangible
benefits to the company.”
- [Oasis] “has presented enough evidence of the failed
strategic partnership with Sumitomo Forestry. Unwinding the
partnership would free up capital, which could be used for
investing in the core business or increasing returns to
shareholders given the current valuation discount.”
- “Management has a history of missing its own performance
goals…. What is even more troubling is that the newly
unveiled mid-term plan (published on May 2024) for FY24-26
sets lower targets than those in the previous
plan…”
- “The company’s operational performance has continued
to deteriorate.”
The time for transformative change at Kumagai is now. A strong
vote for Oasis’s proposals will send a clear message that
management must be accountable to all stakeholders. We firmly
believe that Kumagai Gumi has the potential to become a great
company. In 2024, Japanese companies are embracing governance
changes and improvements in corporate value like never before.
Kumagai must not be left behind.
Oasis calls on its fellow shareholders to vote FOR its shareholder proposal for a dividend of
JPY 160 per share and vote AGAINST the reappointment of Chairman Yasunori
Sakurano and incumbent directors Tatsuru Sato and Shigeru Okada at
the upcoming 2024 AGM. This vote is essential to hold management
accountable for their long history of missteps and to set Kumagai
Gumi on the path to a brighter future.
To learn more about Oasis’s proposals, please visit
www.KumagaiCorpGov.com. We welcome all stakeholders to contact
Oasis at info@KumagaiCorpGov.com to join us in improving Kumagai’s
corporate governance.
***
Oasis Management Company Ltd. (“Oasis”) manages private
investment funds focused on opportunities in a wide array of asset
classes across countries and sectors. Oasis was founded in 2002 by
Seth H. Fischer, who leads the firm as its Chief Investment
Officer. More information about Oasis is available at:
https://oasiscm.com. Oasis has adopted the Japan FSA’s “Principles
of Responsible Institutional Investors” (a/k/a Japan Stewardship
Code) and in line with those principles, Oasis monitors and engages
with our investee companies.
The information contained in this press release (referred to as
the "Document") is an information resource for shareholders in
Kumagai Gumi offered by Oasis, the investment manager to funds that
are shareholders of Kumagai Gumi (the "Oasis Funds"). The Document
is not intended to solicit or seek shareholders' agreements to
jointly exercise any voting rights with Oasis. Shareholders that
have an agreement to jointly exercise their voting rights are
regarded as Joint Holders under the Japanese large shareholding
disclosure rules and they must file notification of their aggregate
share ownership with the relevant Japanese authority for public
disclosure under the Financial Instruments and Exchange Act. Oasis
does not intend to be subjected to such notification requirement.
The Document exclusively represents the opinions, interpretations,
and estimates of Oasis.
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Media For all inquiries, please contact: Taylor Hall
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