A tragedy at Hankyu Hanshin Holdings, Inc, and a slow response from company, has prompted public scrutiny, raising questions about Hankyu’s oversight and corporate culture — and about public company boards’ responsibility for human capital management more broadly.
With thousands of companies holding AGMs during proxy season, it’s hard to know where to start. Glass Lewis’ Controversy Alert service can help, identifying the most crucial meetings globally and allowing investors to make better informed voting decisions with the latest information in hand.
In this post, we provide a roundup of the AGMs taking place this week that were previously highlighted by Controversy Alerts, and look deeper into the situation at Hankyu Hanshin Holdings. To get alerted ahead of time, get in touch and sign up for Glass Lewis’ Controversy Alert service.
Controversy Alerts June 10 — June 14, 2024
June 12 Calibre Mining Corp.; Controversy Alert issued on June 5
June 12 Wuxi AppTec Co. Ltd.; issued May 22
June 13 Grifols SA; issued May 29
June 13 Lyft Inc.; issued May 30
June 13 Tesla, Inc.; issued June 4
June 14 Hankyu Hanshin Holdings, Inc.; issued May 24
Deep Dive: Hankyu Hanshin Holdings, Inc
Shifting investor and societal expectations are forcing Japanese companies to rethink their approach to a wide range of issues, including gender diversity, capital efficiency and risk management. In addition to traditional governance and oversight topics like board composition or share buybacks, the board’s remit is expanding to include areas like human capital management, as illustrated by a recent tragedy involving Hankyu Hanshin Holdings, Inc.
An actor from the Takarazuka Revue, a Japanese all-female musical theater troupe operated by the company’s subsidiary, Hankyu Corporation, committed suicide on September 30, 2023, as a result of power harassment, or bullying, at Takarazuka. The company’s response has drawn public criticism and led to the deterioration of the Group’s overall image.
Takarazuka’s internal investigation, released in November 2023, did not deny the possibility that there was a psychological burden that may have caused a mental disorder, but nonetheless concluded that it could not confirm whether there had been any power harassment. The victim’s family responded in December, providing evidence and written opinions regarding 15 incidents of power harassment, mainly by senior students, and requesting that the summary version of the investigation be removed from the company’s website, where it had been publicly available. The family also submitted a written opinion request that the opera company recognize the acts of power harassment.
Eventually, in February 2024, Takarazuka admitted that about half of the incidents stemmed from power harassment, including long working hours and excessive demands, but denied that the upperclassmen’s coercive words and behavior were the cause of the woman’s death. It wasn’t until the end of March that Hankyu Hanshin Holdings, Inc. itself acknowledged that negligence by the management at the Takarazuka Revue led to the situation by imposing burdens on the theater members for many years and that they bore full responsibility for the situation. The company also acknowledged a breach of duty to take safety precautions for the victim, and announced efforts at Takarazuka and Hankyu Corporation to prevent recurrence, including strengthened organizational management and internal controls, a reduction in the number of performances, initiatives to promote awareness and behavioral change, and the establishment of support systems to ensure that reforms are effective, such as an advisory board consisting of outside experts at Hankyu Corporation and the a new “risk management promotion office” at Hankyu Hanshin Holdings, Inc. In terms of accountability, Takarazuka chair Kazuo Sumi retired from its board effective February 29, 2024; however there have been almost no changes in the membership of the parent company’s board of directors.
With the reputation of Hankyu Hanshin Holdings, Inc. damaged, and operating income for the stage business down nearly one-third for the year, shareholders will have to consider whether the company’s efforts to strengthen group governance and risk management were sufficient.
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