Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>T&amp;D Holdings and HOYA, two March fiscal year-end companies that filed their annual securities reports more than 2 weeks ago this year, have previously filed their reports 2-3 weeks earlier.</li>
<li>Only two companies will revise articles of incorporation this year and postpone the record date. Most companies will hold AGM in June next year and file reports just before AGM.</li>
<li>Since institutional investors decide their votes based on various aspects of the company as a whole, companies should disclose their annual securities reports well in advance of AGM.</li>
</ul>


T&amp;D Holdings and HOYA, two March fiscal year-end companies that filed their annual securities reports more than 2 weeks ago this year, have previously filed their reports 2-3 weeks earlier.
Only two companies will revise articles of incorporation this year and postpone the record date. Most companies will hold AGM in June next year and file reports just before AGM.
Since institutional investors decide their votes based on various aspects of the company as a whole, companies should disclose their annual securities reports well in advance of AGM.


The Change in Record Date Is Difficult, and Most AGMs Next Year Will Be Held in June

<ul>
<li>Takeover defenses peaked in 2008 and have been gradually declining. The direct cause of the difficulty in maintaining advance warning-type takeover defenses is the increase in the foreign shareholding ratio.</li>
<li>Even companies that don't have preemptive anti-takeover may take countermeasures when the risk of takeover increases, but with the publication of “Guidelines on Takeover Defense Measures,” transparent practices are expected.</li>
<li>Not only parent-subsidiary listings, but companies that cannot transform management to generate more cash from holding cash on hand and assets will be unable to continue in their current situation.</li>
</ul>


Takeover defenses peaked in 2008 and have been gradually declining. The direct cause of the difficulty in maintaining advance warning-type takeover defenses is the increase in the foreign shareholding ratio.
Even companies that don't have preemptive anti-takeover may take countermeasures when the risk of takeover increases, but with the publication of “Guidelines on Takeover Defense Measures,” transparent practices are expected.
Not only parent-subsidiary listings, but companies that cannot transform management to generate more cash from holding cash on hand and assets will be unable to continue in their current situation.


Higher Foreign Shareholdings, Which Led to Fewer Takeover Defense, Push Companies To Further Reforms

<ul>
<li>Considering that it took seven years to finally begin reducing policy-held shares, it seems reasonable to assume that many companies will begin seriously incorporating capital costs into management in 2028.</li>
<li>TSE states that while Prime Market has most companies whose initiatives are out of step with investors' perspectives, companies whose initiatives are highly regarded by investors show superior stock performance.</li>
<li>TSE appears to be placing its hopes on efficient market hypothesis. However, investors need to see increase in capital profitability that will convince them of the path to value creation.</li>
</ul>


Considering that it took seven years to finally begin reducing policy-held shares, it seems reasonable to assume that many companies will begin seriously incorporating capital costs into management in 2028.
TSE states that while Prime Market has most companies whose initiatives are out of step with investors' perspectives, companies whose initiatives are highly regarded by investors show superior stock performance.
TSE appears to be placing its hopes on efficient market hypothesis. However, investors need to see increase in capital profitability that will convince them of the path to value creation.


Will Management that Incorporates Cost of Capital Be Fully Implemented 7 Years from Now, in 2028?

<ul>
<li>Since % of women among internal directors is low, many companies try to increase external directors, which leads to an issue of directors serving on the boards of multiple companies.</li>
<li>Investors expect gender diversity to have long-term impact on business performance. However, due to the low percentage of female board members, no clear correlation with value creation has been demonstrated.</li>
<li>In evaluations of board effectiveness, it's clear that few companies share issues within boards and engage in sufficient discussion. There appears to be a lack of sufficient discussion on issues.</li>
</ul>


Since % of women among internal directors is low, many companies try to increase external directors, which leads to an issue of directors serving on the boards of multiple companies.
Investors expect gender diversity to have long-term impact on business performance. However, due to the low percentage of female board members, no clear correlation with value creation has been demonstrated.
In evaluations of board effectiveness, it's clear that few companies share issues within boards and engage in sufficient discussion. There appears to be a lack of sufficient discussion on issues.


Now Is Time to Increase the Number of Female Directors so that They Can Contribute to Value Creation

<ul>
<li>It's unclear whether voluntary compensation committee can make proactive recommendations, or whether it simply follows the proposals of CEO/BOD, and how much the decisions of the voluntary committee are influential.</li>
<li>Only 0.1% of listed companies are disclosing the individual compensation of all board directors, as investors have long requested, and there has been no progress in disclosing individual compensation.</li>
<li>Performance-Based compensation is implemented by 72.7% of companies listed on the Prime Market. Recently, there has been an increase in the introduction of restricted stock in place of stock options.</li>
</ul>


It's unclear whether voluntary compensation committee can make proactive recommendations, or whether it simply follows the proposals of CEO/BOD, and how much the decisions of the voluntary committee are influential.
Only 0.1% of listed companies are disclosing the individual compensation of all board directors, as investors have long requested, and there has been no progress in disclosing individual compensation.
Performance-Based compensation is implemented by 72.7% of companies listed on the Prime Market. Recently, there has been an increase in the introduction of restricted stock in place of stock options.


Disclosure of Individual Board Directors' Remuneration Has Not Progressed

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

The Change in Record Date Is Difficult, and Most AGMs Next Year Will Be Held in June

I would like to discuss the Nikkei newspaper article dated June 5, “60% of annual securities reports disclosed one day before shareholders'...

Metrical Inc

Higher Foreign Shareholdings, Which Led to Fewer Takeover Defense, Push Companies To Further Reforms

I would like to discuss the issues on the “Corporate Governance White Paper 2025” material disclosed by the TSE on May 26.

Metrical Inc

Will Management that Incorporates Cost of Capital Be Fully Implemented 7 Years from Now, in 2028?

I would like to discuss the issues on the “Corporate Governance White Paper 2025” material disclosed by the TSE on May 26.

Metrical Inc

Now Is Time to Increase the Number of Female Directors so that They Can Contribute to Value Creation

I would like to discuss the issues on the “Corporate Governance White Paper 2025” material disclosed by the TSE on May 26.

Metrical Inc

Disclosure of Individual Board Directors' Remuneration Has Not Progressed

I would like to discuss the issues on the “Corporate Governance White Paper 2025” material disclosed by the TSE on May 26.

Metrical Inc