Highlights from the world of Proxy Papers you can’t afford to miss!

ProxSeasInsider 300x200Toshiba Corporation

Tokyo Stock Exchange – June 28

This is a low. Toshiba has been plumbing the depths for several years now, with accounting scandals and writedowns contributing to a 50% decline in share value since 2015. However its current position — branded a “security on alert” by the Tokyo Stock Exchange, set to hold its annual shareholder meeting without releasing key financial statements, and struggling to complete a spin-off of its chip business – may be the very bottom.

In April 2017, after twice delaying their release, Toshiba finally submitted its financial statements for the third quarter of 2017 – but without the endorsement of its auditor, PwC Aarata, which has stated its belief that further investigations into acquisitions by the Westinghouse subsidiary – which filed for Chapter 11 bankruptcy in March 2017 following the revelation of concealed losses – were warranted. Due to PwC Aarata’s decision not to sign off on the financial results, Toshiba fell short of the TSE listing standards, and will be unable to present its business report, consolidated financial statements, financial statements, independent auditor’s report or the audit committee’s report to shareholders at its upcoming AGM. Instead, Toshiba states that it will present these materials at an extraordinary meeting, which will be held at a later date following the completion of its audit – which will be completed by a new firm, with Toshiba having cut ties with PwC Aarata citing unresolvable conflicts (PwC Aarata was only appointed just over a year ago, after the prior auditor, Ernst & Young ShinNihon, was fined ¥2.1 billion for failing to spot the company’s accounting irregularities).

Toshiba’s ace in the hole is its chips division, with a spinoff expected to yield at least ¥2 trillion; however, it’s having trouble playing the card. While the company desperately needs the capital, the sale has been complicated by the interests of other stakeholders – namely the state-backed Innovation Network Corp of Japan, which is seeking to keep the unit’s technology under Japanese control, and Western Digital, which jointly operates Toshiba’s primary chip plant and has sought an injunction to get a sign-off on any sale.

FUJIFILM Holdings Corporation

Tokyo Stock Exchange – June 29

One obviously doesn’t want to kill the goose that lays the golden eggs; however, it probably makes sense to keep a close eye on the thing. Fujifilm is learning that lesson as it joins the list of Japanese conglomerates to suffer accounting irregularities at its subsidiaries. In this case, over-booking and early-booking of sales revenue at the company’s Xerox businesses in Australia and New Zealand contributed to an accumulated ¥28.1 billion loss. The company reacted quickly in appointing a third-party investigative committee, which uncovered a sales-driven environment, ineffective internal controls, and insufficient oversight of the Xerox subsidiaries – problems that appear to have been allowed to persist because Xerox served as the breadwinner of the Fuji group. That independence and autonomy is now being curtailed as Fujifilm has taken a number of measures to improve its oversight over the subsidiaries, including consolidation of corporate reporting, improved internal controls, more outside directors, and further board and management reshuffling, with several Fujifilm directors joining the Fuji Xerox board. These are certainly appropriate steps to take, assuming that the problems really were isolated to that subsidiary. However given that a third-party committee investigating the incident uncovered cases of accounting malpractice beyond its original subject of investigation, shareholders may have tough questions regarding accounting and controls throughout the rest of the Fuji group.

Signet Jewelers Limited

New York Stock Exchange – June 28

While it may seem like tech companies are pushing the boundaries of inappropriate behavior and culture, the brick-and-mortar retail sector has its share of problems. Signet’s AGM comes on the back of a May 2017 settlement with the U.S. Equal Employment Opportunity Commission, which had filed a lawsuit against the Company in 2008 alleging intentional and disparate impact gender discrimination with respect to pay and promotions of female retail store employees. While the settlement included “no findings of liability or wrongdoing”, it also includes a number of steps the company must take to improve its employment practices, including appointing experts in compliance and organizational philosophy, and additional staff training on federal discrimination laws. Despite the EEOC settlement, arbitration of a separate class-action lawsuit involving 69,000 current and former employees remains ongoing. The lawsuit alleges discriminatory store-level employment practices, with hundreds of employees claiming that female employees were routinely groped, demeaned, and worse. A trial is not expected until 2018.

Kuroda Electric Co. Ltd.

Tokyo Stock Exchange – June 29

Kuroda’s upcoming AGM serves as Round II of a proxy contest that started in 2015, when Yoshiaki Murakami tried unsuccessfully to get himself and three other dissident nominees onto the board. On that occasion, management appears to have taken their opposition to Mr. Murakami a bit too far: in the run up to the special meeting, a supposed letter from a group of employees proclaiming their disagreement with the dissident proposals was posted to the company’s website, before being exposed as a forgery created by Kuroda executives. This time around a single dissident nominee has been put forward, however the dissident group is still effectively controlled by Mr. Murakami. Their case focuses on increased merger activity, improving shareholder returns through share buybacks – and improving corporate governance in light of the forgery fiasco. In addition to the company’s strategy and capital management, shareholders will have to consider whether its efforts towards improving governance and internal controls – including a recurrence prevention measure, enhanced transparency, and the appointment of an audit-focused independent director in 2016 – are sufficient.

Idemitsu Kosan Company Limited

Tokyo Stock Exchange – June 29

Idemitsu Kosan is set for another showdown with its founding shareholder, the Idemitsu family. At issue is a proposed merger with rival Showa Shell Sekiyu, which the company was hoping to have completed by April 2017, but which has now been on hold for months due to opposition from the family. Their 33.92% shareholding effectively gives them veto power over a deal, which would require two-thirds approval, and a fair amount of sway in other matters – last year representative director and president Takashi Tsukioka was only barely re-elected with just 52.3% shareholder support. That opposition looks set to continue, and the family has announced that it will take legal action if the company tries to dilute it by issuing shares to a third-party. For its part, management appears to be pressing ahead with its strategy: during the past year Idemitsu Kosan and Showa Shell have increased the level of collaboration between the two companies, and in December Idemitsu took a 31.3% stake in Showa from Royal Dutch Shell plc. With the company seemingly intent on integrating with Showa, merger or not, and the family remaining staunchly opposed, shareholders can expect a relatively tense AGM.

American International Group, Inc.

New York Stock Exchange – June 28

Ah poor Peter Hancock. Back in late 2015, the former CEO of AIG rebuffed Carl Icahn, only to have his position threatened if the company did not pursue the activist’s proposed strategy. After walking that tightrope for over a year, with concessions on the company’s structure and appointment of representatives from Icahn and Paulson, Hancock is nonetheless out of a job. Don’t feel too bad for him though: rather than backroom politics, his departure appears to relate directly to poor performance. He left shortly after the company announced a $3 billion Q4 loss, itself driven by a larger than-expected $5.6 billion pre-tax charge to boost its claims reserve – of which approximately $3 billion relates to policies issued when Hancock ran the company’s property-casualty unit. He’s been replaced by Brian Duperreault, who previously served as president and CEO of rival Hamilton Insurance Group, and who has the tweeted-approval of Mr. Icahn. While Duperreault has indicated that he does not intend to fully pursue the activist’s break-up strategy, Icahn’s pressure has already resulted in full and partial spin-offs and a new ‘modular’ business structure, along with billions in share buybacks.


  • Syngenta AG (SIX Swiss Exchange – June 26)
  • Mastercard Incorporated (New York Stock Exchange – June 27)
  • Altice N.V. (Euronext Amsterdam – June 28)
  • Mediaset S.p.A. (Borsa Italiana – June 28)
  • 3i Group plc (London Stock Exchange – June 29)
  • Bed Bath & Beyond Inc. (NASDAQ – June 29)
  • Mobile Telesystems PJSC (Moscow Exchange – June 29)
  • NH Hotel Group S.A. (Bolsas y Mercados Españoles – June 29)
  • Panasonic Corporation (Tokyo Stock Exchange – June 29)
  • PJSC Gazprom (Moscow Exchange – June 30)