Oasis Management Company Ltd. (“Oasis Management”), an investment management firm and a shareholder of Kao Corporation, recently released a statement expressing concerns regarding the governance practices of the company. Specifically, the statement addresses the Director candidates proposed for Kao’s upcoming 119th Ordinary General Meeting of Shareholders. In response, Kao Corporation has issued a detailed rebuttal, reaffirming its commitment to transparent governance and long-term shareholder value creation.
Kao Corporation’s Response to Governance Concerns
Kao’s Board of Directors and management strongly emphasized their dedication to fostering long-term shareholder value through a strategic and well-considered approach to governance. They outlined their commitment to engaging with stakeholders constructively and addressing challenges by incorporating diverse perspectives, ensuring a balanced governance structure, and enhancing corporate value.
Rigorous Selection Process for Board Members
Kao detailed its stringent selection process for Board members, aiming for an optimal mix of skills and experience. The Committee for Examination of Nominees for Directors and Audit & Supervisory Board Members undertook a comprehensive six-month review before finalizing its recommendations. This process, the company noted, was completed well before Oasis Management proposed its candidates.
The timing of Kao’s announcement regarding Board and Auditor candidates was also clarified. Kao explained that December 2nd was chosen to coincide with the announcement of changes to Executive Officer roles. For instance, David Muenz, a current Director and Executive Officer, is set to retire from his Executive Officer position at the end of December but will continue as a Director until the March shareholders’ meeting. Kao asserted that this timing reflects its commitment to transparency and was unrelated to Oasis Management’s actions.
Addressing Allegations by Oasis Management
Kao refuted several claims made by Oasis Management, including accusations of inadequate transparency, insufficient due process, and governance lapses. Oasis Management’s assertion that Kao had “abandoned its oversight function” by significantly delegating authority to management was specifically addressed. Kao clarified that this delegation aligns with the provisions of Japan’s Companies Act and is designed to enhance efficiency in decision-making while maintaining robust supervisory mechanisms.
The company further explained that it had engaged with Oasis Management regarding its proposed candidates, adhering to the standard screening process established by the Committee for Examination of Nominees for Directors and Audit & Supervisory Board Members. Kao also shared that Oasis Management had been informed of this process in detail. The allegations of disingenuous engagement and refusal to ensure transparency were characterized as inaccurate and inconsistent with the facts.
Commitment to Transparent Governance and Strategic Goals
Kao reaffirmed its dedication to transparent governance practices and shareholder engagement. The company remains focused on implementing its “K27 strategy,” which centers on enhancing corporate value and delivering strong returns to shareholders. As part of this strategy, Kao seeks to foster effective governance practices that balance operational agility with rigorous oversight.
The company also reiterated its commitment to adapting its governance approach as necessary to meet the evolving needs of the business environment and shareholder expectations. Kao’s efforts to engage with all stakeholders reflect its goal of maintaining an open and cooperative dialogue, ensuring alignment between its governance practices and its broader corporate objectives.
Looking Ahead: Kao’s Vision for Growth and Governance
Kao’s response underscores its intention to balance robust governance with strategic decision-making to secure its long-term growth and market leadership. By emphasizing transparency, inclusivity, and a clear governance framework, the company aims to address shareholder concerns while remaining steadfast in its commitment to delivering value.
Through ongoing stakeholder engagement and adherence to rigorous selection and governance processes, Kao seeks to further enhance its reputation as a leader in its industry. The company remains focused on building trust with its shareholders, strengthening its governance structures, and achieving sustainable growth in the years ahead.
Kao’s response to Oasis Management’s claims not only demonstrates its resolve in addressing shareholder concerns but also reflects its broader commitment to fostering a culture of transparency and accountability. This approach, the company believes, will position it to navigate future challenges effectively while remaining aligned with its long-term strategic vision.
