Japan Investors Vote for Better Returns

It should not have come as a surprise when Eizo Murakami, the chief executive of Japanese shipping company Kawasaki Kisen, secured fewer shareholder votes for reappointment in June. His company’s return on equity has averaged a dismal minus 2.7 per cent over the past five years. As a result, the management failed to receive the blessing of proxy adviser Institutional Shareholder Services, which requires ROE of 5 per cent before it will recommend support for company motions. Even so, few anticipated that the shareholder protest would be so strong that Mr Murakami won only 57 per cent of the votes, compared with 86 per cent last year. Tensions increased further when it emerged that the key shareholder refusing to support Mr Murakami was the enigmatic Singapore-based fund, Effissimo Capital, which now holds a 36 per cent stake in Kawasaki Kisen. Some 14 months after the introduction of a corporate governance code in Japan, Mr Murakami is not alone. Chief executives are increasingly finding themselves under attack from previously little-known activist funds.