To increase the value of each company, it is necessary for their management to promote reforms from a medium- and long-term perspective while also earnestly listening to the opinions of shareholders.
The peak has passed for shareholders' meetings held by companies whose account settlement terms end in March. On Thursday, the largest number of listed companies, at more than 700, held general meetings of their stockholders.
Only 30 percent of all companies held shareholders' meetings on that day. The figure was in stark contrast to the more than 90 percent on the peak days during the 1990s.
As corporate racketeers' activities have continued to quiet down, companies may have found it less necessary to concentrate their shareholders' meeting on a specific day.
A record 42 companies were presented by shareholders with subjects for discussion. This shows that shareholders' meetings are less and less venues just for confirming matters on the agenda presented by companies.
The current move among companies and their shareholders to deepen constructive dialogue should be solidified.
It is noteworthy that the guidelines for corporate governance, a code of conduct applied to listed companies, were revised in June.
The new guidelines included ideas about boards of directors, stipulating that companies should choose one-third or more of their board members from among highly independent figures recruited from outside, if they find it necessary to do so. The guidelines also called for diversifying the lineup of directors through such measures as appointing women and foreign nationals.
The aim of accepting diverse opinions in corporate management is understandable.
Needless to say, there is no point in that move if it is only intended to make the board of directors look better in appearance.
Improve corporate governance
Such companies as Kobe Steel, Ltd. and Mitsubishi Materials Corp. were not able to prevent misconduct involving data falsification, despite the presence of directors from outside. These companies were also too late in dealing with their problems after the cases came to light.
External board members are weighted toward famous business operators or experts, and in many cases, they hold such positions at more than one company. What should be done to secure persons capable of properly perceiving the problems inherent in business management? Wisdom should be exerted in improving corporate governance.
Another feature of the shareholders' meetings this year was the low percentage of approvals for appointed directors at a string of companies.
Although the figure usually exceeds 90 percent, some companies, including those that had been mired in scandals, gained support of only 60 to 70 percent of shareholders for their selection of directors. Undoubtedly, shareholders are turning an increasingly stern eye toward companies. Business operators should adopt a more serious attitude.
The total net income gained during the settlement term ending in March by corporations listed in the First Section of the Tokyo Stock Exchange, excluding financial companies, exceeded 30 trillion yen, a new all-time high. The amount of dividends to shareholders reached 8.7 trillion yen, up 16 percent from a year earlier.
If business operators only pass on part of their corporate profits to stockholders for a short period, for example through increased dividends in response to such activist shareholders as investment funds, it cannot be described as responsible business management.
To utilize the current favorable business performances to achieve stable growth, myopic responses to the situation must be avoided, such as excessive preoccupation with a quarterly settlement of accounts.
Efforts should be made to promote capital investment, reinforce research-and-development activities and raise the wages of employees, based on a hard look at the future.
(From The Yomiuri Shimbun, July 1, 2018)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
