“Shouldn't you buy” brands!? 10 checkpoints for management companies to hurt management at general shareholders' meetings

The June general shareholders' meeting season has arrived. In recent years, not only activists (talking shareholders), but in the past it was seen as the “ruling party” on the corporate sideAsset management and management companies are also making strict evaluations of companies regarding the exercise of voting rights。
Professional investors' evaluations can also be called “the trend of stock selection,” and there is a possibility that subsequent stock prices will also be affected. Therefore, major domestic asset management and management companies have announcedCriteria for exercising voting rights at general shareholders' meetingsBased onOperation professionals say “NO!” to management 10 points to confrontI gave an example. It would also be a good idea to check stocks that have already been invested in and stocks that are candidates for investment from the following viewpoints.

◆Checkpoint 1：Continuous deficits
Regarding performance, there are many management companies that oppose the appointment of directors of companies that have continuous deficits. Many management companiesOppose the reappointment of top management or directors who have been in office during the deficit period for 3 consecutive terms in deficitIt says so.
Meiji Yasuda Asset Management says it opposes in principle the reappointment of representative directors of companies that have had operating deficits for 2 consecutive terms.

◆Checkpoint 2：Low ROE
A company with a low ROE (return on equity) for 3 consecutive terms will question the responsibility of directors who have been in office during that timeThere are quite a few management companies. Meiji Yasuda Asset Management says it opposes in principle the reappointment of representative directors of companies with ROE of less than 8% for 3 consecutive terms. Regarding dividend plans by low dividend companies described later,There are many management companies that oppose it only when the ROE is less than 8%。

◆Checkpoint 3：Stock prices are sluggish
Ask the responsibility of directors who have been in office for 3 years or more for companies with poor stock price performance compared to other listed companiesThere are also management companies. Asset Management One says that it opposes in principle the appointment of directors for 3 years or more for companies that have a total shareholder return (TSR) of companies listed on the Tokyo Stock Exchange Prime Market where the total shareholder return (TSR) with the stock price increase rate and dividend yield is less than one-third.

◆Checkpoint 4：PBR split 1 times
Regarding PBR (stock price-net asset ratio) 1x, which is attracting attention due to requests from the Tokyo Stock Exchange, Nissay Asset Management will start in 2025/6Oppose the reappointment of representative directors of companies that are less than 1 times and are not compatible with the “realization of management conscious of capital costs and stock prices” of the Tokyo Stock ExchangeIt shows the policy to do so.

◆Checkpoint 5：The payout ratio is low
In terms of dividends,25% dividend payout ratio, 30% total return ratioThere are management companies that decide whether to oppose the company proposal based on Nikko Asset Management says that when proposing dividends with a total return ratio of less than 30% for companies with an ROE of less than 8% for 3 consecutive terms, they oppose not only proposals relating to dividends but also the appointment of directors.

◆Checkpoint 6：Cash holdings and dividends are unbalanced
For cash-rich companies, the hurdles required by management companies regarding dividend payout ratio and total return ratio are getting higher. Sumitomo Mitsui Trust Asset Management will start this seasonIn principle, it is opposed to a bill that does not ensure a dividend payout ratio of 50% or more when conditions such as PBR 1 times split overlap for companies with a net cash ratio of 30% or moreIt says so.

◆Checkpoint 7：There are many policy holdings
From the viewpoint of capital efficiency, the view from management companies on policy holdings has also become stricter. As an opposing conditionWhen policy holdings hold 20% or more of net assetsThere are many management companies that use it as a guide, but Meiji Yasuda Asset Management opposes the reappointment of representative directors of companies with policy holdings holding 10% or more of net assets.

◆Checkpoint 8：There are no female directors
Many management companiesOppose the appointment of directors without womenIt shows the policy to do so. Many listed companies already have female directors, but Nikko Asset Management's futureConsider a gradual increase in headcount requirementsLike making it clear, next season onwardsThe trend of stepping down to the “number” and “ratio” of female directors is intensifyingSeemably.

◆Checkpoint 9：Few outside directors
Many management companies2 or more outside directors and at least one-third of the board of directorsI'm looking for it. Also, Nikko Asset Management, etc.If a listed company has a parent company, the majority of directors are outside directorsThis is the standard for appointing directors.
Furthermore, many management companies have specified standards relating to the “independence” of outside directors,Oppose “outside” directors who do not involve an entityIt shows an attitude of doing it.

◆Checkpoint 10：Inadequate number of directors
Many management companiesOppose an easy increase in directorsThe policy to be implemented has been clarified, but Nomura Asset Management clearly bases the “appropriate number” of 5 people or more and less than 20 people. Also, Sompo Asset Management excludes Audit and Supervisory Committee membersIf there are 15 or more directors, sales per person exceed 30 billion yenBased on that, the number of directors commensurate with the size of the company is required.