Dialogues between Seikitokyu and Strategic Capital at the AGM
We have done numerous activities to increase the Seikitokyu’s shareholders’ value. For example, discussions with managements, questions at the AGM, sending letters and etc. Followings are dialogues at the 2018 AGM.
AGM in June 2018
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Regarding outside director
The outside directors who come from a major shareholder with 22% of voting rights is a representative of such major shareholders, not an independent director representing minority shareholders.
This is the reason the favour votes for the chairman of Tokyu Construction were only 73% at the last AGM. We cannot see why you persist on the election of him as an outside director. It makes sense that a major shareholder sends someone as a director. But he should be a part-time director, not an outside director.
We will consider it.
2 candidates for auditors are both related to Tokyu Construction. The incumbent outside auditor is a standing auditor of Tokyu Construction, too. If the 2 auditors are elected, all 3 auditors are related to Tokyu Construction. We judge those who are related to the largest shareholder are not secured his independency, so we vote against their election.
In the Corporate Governance Report, Seikitokyu states that the candidates of auditors should have sufficient insight, knowledge and experience to fulfil their duty, and be expected to give useful advices. We found this statement misses an important information.
To be exact, the statement should be “appropriate person as above and related to Tokyu Construction”.
Regarding capital allocation
Seikitokyu announced 30% total return ratio as a new shareholders return policy. According to this policy, remaining 70% will be accumulated as equity capital.
As CEO commented that “the role of medium-term management plan changes from revitalization to regrowth”, Seikitokyu has transited, from accumulating equity capital, to a new stage of investing in business, increasing shareholders return and focusing on capital efficiency.
We hope investment is funded not only by equity capital but also by borrowings. Seikitokyu experienced difficulty in the past and focused on stabilization of financial condition. But it is time to change the mind to improve capital efficiency. Please think about how to increase the value of share price.
We pay attention to the balance but understand the importance of shareholders return.
At the 2018 AGM, we voted against the election of CEO, the outside director and auditors as stated above.