By Makiko Yamazaki
TOKYO (Reuters) -Japanese elevator maker Fujitec Co Ltd will learn if its board will be overhauled after a shareholder vote on Friday, amid confrontation with an activist fund that has descended into rare personal attacks and charges of intimidation.
Its top shareholder with a 17% stake, Oasis Management, aims to replace all five outside directors of an eight-strong board with its own candidates at an extraordinary general meeting, to blunt what it claims is the founding family’s undue influence.
Fujitec, a 75-year-old company with a $1.9 billion market capitalisation, said it believes the ultimate objective of Hong Kong-based Oasis is full management control, which Oasis denies.
Almost a year of tit-for-tat exchanges involving a dive into candidate careers has raised the case’s profile, with governance experts pointing to the importance of nominee background checks, as well as the case’s impact on candidates deciding whether to accept nominations from activists for fear of being singled out.
The case also marks a step up in animosity between corporate Japan and foreign activists, with confrontation becoming more common. Still, debates about candidates usually focus on skills.
Critiques of individuals being put forward “is very unusual, not only in Japan, but other jurisdictions,” said Cas Sydorowitz, global CEO of proxy solicitor Georgeson. “It’s not very professional and doesn’t engender good governance.”
Oasis said it had discussed concerns with Fujitec privately before airing them publicly in May, detailing real estate deals between Fujitec and members of the founding Uchiyama family.
Awaiting a third-party probe, Fujitec withdrew a proposal to re-elect then-Chief Executive Takakazu Uchiyama to the board an hour before its June shareholder meeting, and appointed him to an unelected chairman role – a move Oasis objected to, saying it denied shareholders the right to vote on the matter.
Fujitec has since raised concerns about some of the six nominees put forward by Oasis. It cited personal details from court documents from one nominee’s settled lawsuit against a former employer, and flagged compliance issues at a firm while another nominee was an executive there.
The activist fund said Fujitec and related parties undertook a “campaign of intimidation” against its nominees that included a telephone call and letters to workplaces. A Fujitec spokesperson said the firm was not involved in such a campaign.
Oasis withdrew two nominees and added one – which Fujitec said created doubt about nominee qualifications and commitment.
As the battle escalated, six outside directors became five as one resigned due to “personal circumstances”.
Proxy adviser Institutional Shareholder Services Inc (ISS) has recommended voting for Oasis’ board proposals, citing what it regards as the incumbent board’s inability to overcome the strong influence of Uchiyama who relinquished the role of CEO on the day of the June meeting.
ISS peer Glass Lewis recommended “a more nuanced approach” of keeping some of the current board members and adding four of the six Oasis candidates to retain some continuity.
“There’s a decent chance Oasis will win all or most of its slate,” said Travis Lundy of Quiddity Advisors, who publishes on Smartkarma. “If that happens, there is a non-negligible possibility Fujitec will see new management in the next fiscal year.”
(Reporting by Makiko Yamazaki; Editing by David Dolan and Christopher Cushing)
