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HONG KONG, June 21, 2024--(BUSINESS WIRE)--Oasis Management Company Ltd. ("Oasis") is the manager to funds that beneficially own over 10% of Japanese construction company Kumagai Gumi Co., Ltd. (1861 JT) ("Kumagai Gumi", "Kumagai" or the "Company"). Oasis has adopted the Japan FSA’s "Principles of Responsible Institutional Investors" (a/k/a the Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with its investee companies.
Oasis welcomes the recently published research report from leading independent proxy advisory firm, Glass Lewis, which recommends that Kumagai Gumi shareholders vote AGAINST the appointment of Chairman Yasunori Sakurano.
Oasis also welcomes the endorsement from another independent proxy advisory firm, Institutional Shareholder Services Inc. ("ISS"), which recommends that shareholders vote AGAINST the appointment of Kumagai incumbent directors Shigeru Okada and Tatsuro Sato, and FOR the JPY160 per share dividend proposed by Oasis.
Key statements by Glass Lewis in its voting recommendation include:
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"[I]nvestors have adequate cause to signal dissatisfaction with the status quo, and consider more pointedly direct rejection of Mr. Sakurano's candidacy… to represent the most suitable means of expressing that dissatisfaction."
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"Oasis continues to submit compelling arguments related to, among other things, significant and protracted declines in Kumagai’s core return measures (ROE, ROA and ROIC) across Mr. Sakurano’s prior executive tenure, the Company’s fairly weak margins relative to peers, substantial and protracted misses on stated operational targets, material revisions to fundamental goals (notably a markedly lengthy extension of Kumagai’s long-stranding JPY50 billion ordinary income objective) and planned investments in what appear to be low yield, peripheral business."
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"[T]here remains cause for investors to hold Mr. Sakurano – as current board chair and the Company’s prior president and CEO through March 31, 2024 – accountable."
Key statements by ISS in its voting recommendation include:
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"A history of missed performance targets calls into question management’s ability to stabilize and turn around the core operations, as well as the board’s oversight."
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Oasis’s "campaign has raised significant concerns about operational issues, poor capital allocation practices, and a capital alliance that does not appear to deliver tangible benefits to the company."
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[Oasis] "has presented enough evidence of the failed strategic partnership with Sumitomo Forestry. Unwinding the partnership would free up capital, which could be used for investing in the core business or increasing returns to shareholders given the current valuation discount."
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"Management has a history of missing its own performance goals…. What is even more troubling is that the newly unveiled mid-term plan (published on May 2024) for FY24-26 sets lower targets than those in the previous plan…"
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"The company’s operational performance has continued to deteriorate."